Corporate Head Office – Melbourne
Registered Office
Syrah Resources Limited
c/- Vistra Australia (Melbourne) Pty Ltd
Level 4, 96-100 Albert Road
South Melbourne VIC 3205
Telephone: +61 3 9670 7264
Email: enquiries@syrahresources.com.au
Website: www.syrahresources.com.au
Principal Place of Business
Syrah Resources Limited
c/- Work Club Melbourne
Olderfleet
477 Collins Street
Melbourne, VIC 3000
ANNUAL REPORT 2021
For the financial year end 31 December 2021
CORPORATE DIRECTORY
DIRECTORS
James Askew Non-Executive Chairman
Shaun Verner Managing Director and Chief Executive Officer
José Manuel Caldeira Non-Executive Director
Lisa Bahash Non-Executive Director
Sara Watts Non-Executive Director
John Beevers Non-Executive Director
SHARE REGISTRY
Computershare Investor Services Pty Limited
Yarra Falls, 452 Johnston Street
Abbotsford VIC 3067
Telephone: 1300 850 505 (within Australia)
+61 3 9415 4000 (overseas)
Email: web.queries@computershare.com.au
Website: www.computershare.com.au
COMPANY SECRETARY
Melanie Leydin
REGISTERED AND CORPORATE
OFFICES
Corporate Head Office – Melbourne
Registered Office
Syrah Resources Limited
c/- Vistra Australia (Melbourne) Pty Ltd
Level 4, 96-100 Albert Road
South Melbourne VIC 3205
Telephone: +61 3 9670 7264
Email: enquiries@syrahresources.com.au
Website: www.syrahresources.com.au
Principal Place of Business
Syrah Resources Limited
c/- Work Club Melbourne
Olderfleet
477 Collins Street
Melbourne, VIC 3000
Dubai Office
Syrah Global DMCC
Office 22F, Gold Tower, Cluster I
Jumeirah Lakes Towers
Dubai, United Arab Emirates
Telephone: +971 4244 5955
Email: marketing@syrahresources.com.au
Mozambique Office
Twigg Exploration and Mining Limitada
Millennium Park Building
Avenida Vladimir Lenine
Nr 174, Block B, Level 5 Andar
Maputo, Mozambique
Website: www.twigg.co.mz
Louisiana Office
Syrah Technologies LLC
2001 D. A.
Biglane Road, Vidalia
LA, 71373
United States of America
AUDITORS
PricewaterhouseCoopers
2 Riverside Quay
Southbank VIC 3006
SOLICITORS
Gilbert + Tobin
Level 25, 101 Collins Street
Melbourne VIC 3000
STOCK EXCHANGE LISTING
Australian Securities Exchange
(ASX Code: SYR)
American Depository Receipts
(Ticker Symbol: SRHYY)
CONTENTS
COMPANY PROFILE
2021 HIGHLIGHTS
CHAIRMAN'S LETTER
MANAGING DIRECTOR AND CEO’S LETTER
DIRECTORS’ REPORT
REMUNERATION REPORT
AUDITOR’S INDEPENDENCE DECLARATION
CONSOLIDATED FINANCIAL STATEMENTS
DIRECTORS’ DECLARATION
AUDITOR’S REPORT
PAGE
1
1
2
3
5
23
50
51
97
98
ADDITIONAL ASX INFORMATION
104
COMPANY PROFILE
2021 HIGHLIGHTS
OUR VISION
To be the world’s leading supplier of superior
quality graphite and anode material products,
working closely with customers and the supply
chain to add value in battery and industrial
markets.
OUR VALUES
Syrah is committed to:
> GOOD HEALTH and WORKING SAFELY at
all times
> PARTNERING with the COMMUNITY and
STAKEHOLDERS for sustainability
> INTEGRITY and FAIRNESS in all our
business dealings
> Being ACCOUNTABLE for our decisions and
actions
> CHALLENGE and SUPPORT our people to
achieve their potential
We will work as a team and act like owners to
deliver shareholder value
> Strong health and safety record with Total
Recordable Injury Frequency Rate ("TRIFR")
of 0.5 for Balama Graphite Operation
(“Balama”) and 0.0 for Vidalia (“Vidalia”) as
at the end of 2021
> Complied with Government protocols
and high internal standards in relation to
COVID-19 and completed a COVID-19
vaccination program at Balama to boost
vaccination rates
> Production at Balama restarted and
increased subject to natural graphite market
conditions and container shipping availability
> Major new logistics option developed to
commence breakbulk shipments through
Pemba port to help manage inventory
positions and enable higher Balama
production and sales
> Advanced strategy to become a vertically
integrated natural graphite Active Anode
Material (“AAM”) supply alternative for USA
and European customer market:
> On-specification natural graphite AAM
produced from Syrah’s fully integrated
AAM facility in Vidalia, Louisiana, USA
> Completed ~50% of detailed engineering
on an initial expansion of Vidalia’s
production capacity (“Vidalia Initial
Expansion”)
> Executed offtake agreement with Tesla,
Inc1
> Progressed commercial and technical
engagement with multiple target AAM
customers
> Final investment decision taken for the
Vidalia Initial Expansion after year end
> Strengthened balance sheet with issue of
A$28 million convertible note tranche, and a
A$250 million equity raising after year end
> Positive momentum continued in Syrah’s key
electric vehicle (“EV”) end market – global EV
sales increased 119% in 2021, versus 2020,
to more than 6.2 million units2
(1) Refer to ASX releases from 23 December 2021 and 29 December
2021
(2) Source: Marklines
1
final investment decision was approved by the Syrah
Board after year end.
Mozambique has continued to be a country where
operating conditions are excellent and our workforce,
who are predominantly local, are outstanding. The
Company has not wavered in its commitment to be a
good corporate citizen in Mozambique and to the host
communities, with commitments to ongoing community
projects under the Livelihood Development Program,
promotion of health awareness and COVID-19
vaccination campaigns in the community, and
alignment to leading practice Environmental, Social
and Governance (“ESG”) frameworks. The Vidalia
Initial Expansion project will provide clear economic
benefits to Concordia Parish in Louisiana and Syrah is
proactively engaging with its community to ensure this
project is well supported.
The A$250 million equity raising completed after year
end ensures that the Vidalia Initial Expansion project
is fully funded to the start of production and the
Company maintains a sustainable financial position
through a variety of natural graphite and shipping
market conditions. Syrah is well capitalised to deliver its
vision and growth strategy.
Finally, the Board thanks our management team for all
that Syrah has achieved in 2021. It was an important
time for the Company with production at the world-
class Balama Graphite Operation recommenced,
the AAM offtake agreement executed and the final
investment decision for the Vidalia Initial Expansion
project taken post year end. A successful transition of
operations at Balama to higher capacity utilisation and
further de-risking of Vidalia’s development are the key
focus areas in 2022 and are aligned with the Board’s
objective to maximise returns to stakeholders.
Jim Askew
Chairman
CHAIRMAN'S LETTER
2021 has been a year of transition at Balama and
milestones at Vidalia, culminating in the announcement
of an offtake agreement for AAM from our Vidalia
facility. In my 2020 Chairman’s letter I outlined the focus
areas for 2021 of strengthening Balama’s position in
the global natural graphite market following a restart
decision and making progress on our vision to become
a vertically integrated supplier of natural graphite AAM
to ex-Asia markets through the development of a large-
scale Vidalia AAM facility. The Company has made very
strong progress on these areas in 2021.
We announced the recommencement of production
at Balama ahead of schedule in March 2021.
The decision to restart Balama production was
underpinned by supportive market conditions and
customer contracting, as well as the reduction in
travel restrictions. The operating and marketing
capability that Syrah maintained through temporary
production suspension ensured that the restart
proceeded efficiently, and it is a testament to the
Balama Operations preparedness that we were able
to recommence production of on-specification natural
graphite one month after the restart decision was
taken. In 2019, Syrah restructured Balama’s cost
base to allow it to operate under a range of market
conditions. The competitive cost profile of Balama
will be demonstrated as production and sales are
increased. Whilst customer demand has been very
strong and growing, disruption in the global container
shipping market has prevented the Company from
demonstrating the full production potential of Balama.
With the development of the breakbulk shipment option
from Pemba port, and an expected normalisation in
the global container shipping market, we are very
optimistic that this potential can be exhibited in 2022.
Exceptional progress was made in advancing Syrah’s
downstream strategy at Vidalia in Louisiana, with
significant milestones announced in 2021 and after
year end. The Company commenced fully integrated
production of on-specification AAM from Vidalia,
following the installation and commissioning of a
commercial scale furnace on site. Syrah’s capability
to process natural graphite first to on-specification
anode precursor material and now to on-specification
AAM has been paramount in Syrah’s qualification
processes with target AAM customers. Syrah awarded
Worley Group a detailed engineering and procurement
services contract for the Vidalia Initial Expansion
project, and detailed engineering on this project
was 50% completed by year end. Importantly, Syrah
entered into an offtake agreement with Tesla, Inc
for AAM from Vidalia, which provided a very strong
foundation for the Company to take a final investment
decision on the Vidalia Initial Expansion project and the
2
SYRAH RESOURCES > ANNUAL REPORT 2021 MANAGING DIRECTOR AND CEO’S LETTER
It is my privilege to present the 2021 Syrah Annual
Report to shareholders. 2021 was an important period,
re-positioning the Company at a transformative point
for the industry. There were positive developments at
Balama, excellent progress in our downstream strategy
to become a vertically integrated producer of natural
graphite AAM and remarkable growth in Syrah’s end-
use markets.
Our health, safety and environment performance was
outstanding. Total Recordable Injury Frequency Rate
at Balama and Vidalia were 0.5 and 0.0, respectively,
at year end and Balama TRIFR has remained below
1 since late 2018. Our commitment to ESG best
practices has been recognised with Syrah achieving
ISO recertification for Health, Safety and Environmental
Management Systems at Balama and ISO certification
for the Quality Management System at Vidalia during
the year.
Since the beginning of the pandemic, Syrah has
had robust COVID-19 protocols in place across the
business. After a significant period free of COVID
interruption, in the latter part of 2021 a number of
employees and contractors at Balama tested positive
to COVID-19. The protocols in place at Balama
contained transmission both on-site and through the
community, and ensured that operational continuity
was maintained. We also completed a COVID-19
vaccination program for Syrah employees and
contractors in December 2021 with 97% participation,
and a vaccination program for the broader Balama
community is being completed to boost vaccination
rates. The health, wellbeing and safety of employees
and contractors remains Syrah’s highest priority.
Continuing to develop our differentiated ESG position,
an independent lifecycle assessment (“LCA”) of Syrah’s
integrated operations, from Balama origin to Vidalia
AAM customer gate, was completed by Minviro Ltd
in accordance with ISO standards. LCA is a globally
recognized and scientifically validated methodology to
quantify direct and embodied environmental impacts
along the life cycle of a product or process. The LCA
estimated that Syrah’s operations exhibit materially
lower global warming potential, or product carbon
equivalent emissions, compared with a representative
natural graphite, natural graphite AAM and synthetic
graphite AAM suppliers in China. The Company is
advancing specific projects, including a solar and
battery system at Balama, and evaluating opportunities
to further reduce the environmental impacts of its
operations.
In March 2021, production recommenced at
Balama following an approximately 12-month
production suspension period due to the market
and logistics disruptions caused by COVID-19.
The recommencement of Balama production was
executed extremely well and ahead of schedule.
The global container shipping industry disruption
has constrained Balama sales, and production,
due to maximum inventory positions being reached
at Balama and Nacala. However, there are many
positives to take away from Balama operations during
2021. Operational performance through the year was
impressive, there was a material improvement in quality
and graphite recoveries, and high production rates
were achieved in campaign runs. Target unit costs
were achieved, embedding improvements and the
restructure undertaken during the suspension period.
Rehiring at Balama has been successful with Syrah
reinstating most of its planned labour and contractor
contingent with high local host community and female
representation.
Whilst Syrah expects container shipping availability to
improve, late in 2021 action was taken to improve sales
and alleviate the inventory constraint on production
through the implementation of breakbulk shipping to
supplement container deliveries. Since the conclusion
of the year, the first breakbulk shipment through
Pemba port has been loaded. Exporting breakbulk
from Pemba creates an additional export option for
Balama products and provides the Company flexibility
in managing logistics to allow significantly higher
product sales than otherwise could be achieved solely
through Nacala port, and accordingly higher Balama
production.
Syrah took significant steps forward in our downstream
strategy with a material offtake agreement being
announced with Tesla, Inc and the successful
conclusion of an array of work streams providing the
basis for the Syrah Board to approve a final investment
decision for the Vidalia Initial Expansion project after
year end. This decision was the culmination of over
six years of product and technology development,
product testing, community, customer and other
stakeholder engagement, as well as feasibility,
engineering and procurement preparation. Syrah is
moving strongly towards becoming the pre-eminent ex-
Asia vertically integrated natural graphite AAM supply
option for battery supply chain participant and Original
Equipment Manufacturer ("OEM") customers. The
Company is targeting first production from the 11.25kt
per annum AAM Vidalia facility in the September
3
Syrah is committed to achieving its strategic objectives,
which include continuing to develop Balama’s crucial
position in the global natural graphite market, and
within the global battery supply chain, and delivering
on our strategy to become a globally significant
vertically integrated supplier of natural graphite AAM
to ex-Asia markets. The business is well positioned
to benefit from the broad-based electrification of the
vehicle fleet, which is rapidly occurring across global
consumer markets, and specifically from the focus
on critical battery mineral supply in the United States.
Syrah’s leadership team and operational, commercial
and functional teams will continue to work towards
growing shareholder value through Syrah’s unique and
advantaged position at both Balama and Vidalia.
Shaun Verner
Managing Director and Chief Executive Officer
2023 quarter. The progress at Vidalia and the vertical
integration with the globally significant Balama
upstream natural graphite operation presents a unique
value proposition to Governments, auto makers and
cell manufacturers. Specifically: scale; independence
and localisation with USA battery production; critical
mineral security; and ESG auditability back to the
graphite source. Syrah also plans to immediately
undertake a Bankable Feasibility Study (“BFS”) for
further expansion of Vidalia to 45kt per annum AAM
production capacity.
Decarbonisation of the global transport sector via
lithium-ion battery powered EVs was a prominent
theme this year. The EV market exhibited remarkable
growth through 2021 with sales increasing 119% year
on year to more than 6.2 million units and monthly
global EV sales exceeding 850,000 units for the first
time in December 20213. EV sales and battery demand
growth are moving through the supply chain and
upstream natural graphite market conditions have been
the strongest since Balama's commissioning in 2017
with rising spot prices for natural graphite evident in the
later part of the year and into 2022. There have been
significant announcements relating to expanding EV
sales and battery capacity globally, and specifically
in the United States in 2021 where battery capacity is
expected to increase considerably over the next five
years to further underpin the vehicle electrification
strategies of all major auto OEMs and the policy
intent of the United States Government. Leading auto
OEMs are positioning to create large-scale EV supply
chains in the USA. With this backdrop, the strategic
importance of a localised natural graphite AAM supply
source and the criticality of Vidalia is clear to all
stakeholders.
(3) Source: Marklines
4
SYRAH RESOURCES > ANNUAL REPORT 2021 DIRECTORS’ REPORT
DIRECTORS
The following persons were
directors of Syrah Resources
Limited during the financial year
and up to the date of this report,
unless otherwise stated:
James Askew
Non-Executive Chairman
Shaun Verner
Managing Director and Chief Executive Officer
José Manuel Caldeira
Non-Executive Director
Lisa Bahash
Non-Executive Director
Sara Watts
Non-Executive Director
John Beevers
Non-Executive Director
COMPANY SECRETARY
Melanie Leydin
Company Secretary
5
INFORMATION ON DIRECTORS
The information on Directors in office as at the date of this
report is as follows:
James Askew
Non-Executive Chairman
Experience and expertise: Mr Askew is a mining engineer
with over 40 years broad international experience as a
Director and Chief Executive Officer for a wide range of
Australian and international publicly listed mining, mining
finance and other mining related companies. He has been
continuously involved with the African mining industry since
1985.
Other current directorships in listed entities:
> Non-Executive Director of Evolution Mining Limited
> Non-Executive Director of Endeavour Mining Corporation
Directorships of listed entities within the past three years:
> Non-Executive Director of Evolution Mining Limited (since
November 2011)
> Chairman of OceanaGold Corporation (March 2007 to
June 2019)
> Non-Executive Director of Endeavour Mining Corporation
(since July 2017)
Special responsibilities:
> Chairman of the Sustainability Committee
> Member of the Remuneration, Nomination and
Governance Committee
Length of service: 7 years and 5 months
Interest in shares, NED rights and performance rights:
SECURITIES
Ordinary shares
Performance rights
NED rights
NUMBER
506,937
Nil
569,107
Shaun Verner
Managing Director and Chief Executive Officer
Experience and expertise: Mr Verner is a senior resource
industry executive with extensive general management and
cross-functional commercial, operations, supply chain, and
leadership experience. Prior to joining Syrah in October
2016, Mr Verner was at BHP Limited for 20 years in a variety
of executive roles, with extensive international commercial
and operational experience across a range of commodities
including copper and base metals, uranium and thermal and
metallurgical coal.
Other current directorships in listed entities: None
Directorships of listed entities within the past three
years: None
Special responsibilities:
> Managing Director and Chief Executive Officer
Length of service: 5 years and 2 months
Interest in shares and performance rights:
SECURITIES
Ordinary shares
Performance rights
NUMBER
1,317,987
4,533,619(1)
(1) The 4,533,619 Performance Rights noted above for S Verner are
current as at the date of the Director’s Report. 217,558 Performance
Rights lapsed on 17 February 2022 and are not included in this
number.
José Manuel Caldeira
Non-Executive Director
Experience and expertise: Mr Caldeira is a prominent and
senior lawyer in Mozambique with over 30 years commercial
and government experience. He is a senior partner at Sal
and Caldeira Advogados, Lda in Mozambique, one of the
leading law firms in Mozambique and a former judge of the
Maputo City Court.
Other current directorships in listed entities: None
Directorships of listed entities within the past three
years: None
Special responsibilities:
> Member of the Audit and Risk Committee
> Member of the Sustainability Committee
Length of service: 7 years and 7 months
Interest in shares, NED rights and performance rights:
SECURITIES
Ordinary shares
Performance rights
NED rights
NUMBER
12,082
Nil
176,874
6
SYRAH RESOURCES > ANNUAL REPORT 2021 Lisa Bahash
Non-Executive Director
Experience and expertise: Ms Bahash has over 30 year's
experience in the automotive OEM, Tier 1 supplier and
aftermarket sectors. Her prior roles included Senior Vice
President, Automotive and Transportation with Jabil Inc., one
of the world’s leading electronics manufacturing services
company, and Group Vice President and General Manager
of Johnson Control’s Power Solutions business, one of the
world’s largest automotive battery manufacturers leading the
OEM and technology strategies including advanced energy
storage and Lithium-ion technologies.
Other current directorships in listed entities:
> None
Directorships of listed entities within the past three years:
> Non-Executive Director of Shawcor Ltd (TSX Listed)
Special responsibilities:
> Chair of the Remuneration, Nomination and Governance
Committee
> Member of the Sustainability Committee
Length of service: 3 year and 9 months
Interest in shares, NED rights and performance rights:
John Beevers
Non-Executive Director
Experience and expertise: Mr Beevers is currently a
Director of Orica Limited. John is a former Director of
QUT Bluebox, the commercialisation arm of Queensland
University of Technology, and former Chief Executive Officer
and Managing Director of GroundProbe. John had a variety
of other roles, including former Executive roles within Orica
Group, including Group General Manager of Chemical
Services and Chief Executive Officer of Orica Mining
Services.
Other current directorships in listed entities:
> Non-Executive Director of Orica Limited
Directorships of listed entities within the past three
years: None
Special responsibilities:
> Member of the Audit and Risk Committee
> Member of the Remuneration, Nomination and
Governance Committee
Length of service: 1 year and 10 months
Interest in shares, NED rights and performance rights:
SECURITIES
Ordinary shares
Performance rights
NED rights
NUMBER
15,583
SECURITIES
Ordinary shares
Performance rights
Nil
NED rights
184,570
NUMBER
38,593
100,000
13,797
COMPANY SECRETARY
Melanie Leydin
Company Secretary
Experience and expertise: Ms Leydin holds a Bachelor of
Business majoring in Accounting and Corporate Law. She is
a member of the Institute of Chartered Accountants, Fellow
of the Governance Institute of Australia and is a Registered
Company Auditor. She graduated from Swinburne University
in 1997, became a Chartered Accountant in 1999 and since
February 2000 has been the principal of Leydin Freyer. The
practice provides outsourced company secretarial and
accounting services to public and private companies across
a host of industries including but not limited to the resources,
technology, bioscience, biotechnology and health sectors.
Ms Leydin has over 25 years’ experience in the accounting
profession and over 15 years as a Company Secretary. She
has extensive experience in relation to public company
responsibilities, including ASX and ASIC compliance, control
and implementation of corporate governance, statutory
financial reporting, reorganisation of companies and
shareholder relations.
Sara Watts
Non-Executive Director
Experience and expertise: Ms Watts has been a director
and audit and risk chair for 13 years across a range of
sectors including technology, logistics, arts and disability. She
has over 30 years of financial, operational and international
experience and has been involved in multiple technology
transformation projects. Her executive experience includes
head of Internal Audit for IBM Asia Pacific, Chief Financial
Officer of IBM Australia/New Zealand, Vice-Principal
(Operations) at the University of Sydney, and interim CEO of
City West Housing.
Other current directorships in listed entities:
> Non-Executive Director of Trajan Scientific and Medical
Directorships of listed entities within the past three
years: None
Special responsibilities:
> Chair of the Audit and Risk Committee
Length of service: 2 year and 10 months
Interest in shares, NED rights and performance rights:
SECURITIES
Ordinary shares
Performance rights
NED rights
NUMBER
48,113
100,000
25,931
7
PRINCIPAL ACTIVITIES
The principal continuing activities of the Group (being Syrah
Resources Limited and its subsidiaries) during the year
consisted of:
> Production of natural graphite products from the Balama
Graphite Operation in Mozambique;
> Sales of natural graphite and ongoing development of
logistics, sales and marketing arrangements with targeted
customers;
> Continued development of the use of graphite from
Balama as an input in the production of anode material
and industrial products;
> Execution of a downstream AAM strategy including
preparation for the construction of the Vidalia Initial
Expansion project to expand production capacity to
11.25kt per annum AAM; and
> Engagement with potential customers for Vidalia AAM,
through provision of sample material for testing and
commercial negotiations on offtake arrangements.
DIVIDENDS
There were no dividends paid, recommended or declared
during the current financial year or previous financial year.
REVIEW OF OPERATIONS
OPERATING REVIEW
Sustainability
The aim of Syrah’s Sustainability Strategy is to operate safely,
ethically and efficiently to create value for our people and
stakeholders. This strategy is supported by the following key
performance areas: health & safety, people, environment,
community development, stakeholder management and
governance. Both Balama and Vidalia have been established
in line with leading practice sustainability standards, with
ISO:45001 (Occupational Health and Safety Management
Systems) and ISO:14001 (Environmental Management
Systems) certifications maintained at Balama since 2018,
and Vidalia achieving certification in ISO:9001 (Quality
Management Systems) during 2021.
A risk and opportunities based approach to managing key
material sustainability matters has been adopted across the
business with all relevant information captured under the
Company’s Risk Management Framework, which is reviewed
at least monthly by the Syrah Senior Leadership Team and
Executive Committee. A robust Corporate Governance
Framework has also been established across the Syrah
Group to enhance the Company’s overall performance and
shareholder value.
Syrah is committed to pursuing alignment with leading
practice ESG frameworks including the International
Council on Mining & Metals (“ICMM”) Mining Principles, the
United Nations Sustainable Development Goals, the Global
Reporting Initiative (“GRI”), and the International Finance
Corporation ("IFC") Performance Standards on Environmental
and Social Sustainability. The Company is also intending to
undertake an independent assessment of Balama against
the Initiative for Responsible Mining Assurance ("IRMA")
Standard for Responsible Mining with the objective of
achieving IRMA-50 certification.
8
People
At Syrah, our people are our point of difference. In pursuit of
our Vision, we have established and continue to drive a high
performance culture founded on the Company Values where
employees, contract partners and value chain participants
are treated with fairness and respect, and where ethical
business practices are upheld.
Syrah is committed to supporting and empowering its people
to achieve their potential by providing a strong foundation
for ensuring all employees have the opportunity to develop
professionally and advance their careers. We remain
committed to upskilling our local workforces and building
internal succession capability to advance the Company’s
long term localisation strategy. At Balama, 96% of our direct
workforce are Mozambican nationals with 38% local (Host
Community) employment. At Vidalia, 45% of the current
Syrah team are local hires from the “Miss-Lou” region.
In 2021, the first edition of the Syrah Group Pulse Survey
was launched across the business to give employees an
opportunity to provide feedback regarding their experiences
at work. The survey covered a range of topics from employee
experience and engagement to diversity and inclusion
performance, leadership, company communication, and
compliance and governance. Feedback from the survey was
extremely positive and insightful, with diversity and inclusion
performance scoring the highest overall.
Health and Safety
The health, safety and wellbeing of employees, contractors
and key stakeholders remains Syrah’s highest priority, which
is why the Company has adopted a whole-of-business
approach to maintaining a strong health and safety culture
across the Group.
Through 2021, Syrah continued its proactive, comprehensive
and agile approach to mitigating the risk of COVID-19
transmission within its workplaces and the communities in
which the Company operates. Robust COVID-19 protocols
and preventative measures remain in place across the Group
which have been successful in managing and minimising the
impact of the pandemic on the business and our people.
Syrah’s health and safety performance remained strong
during the year with a TRIFR of 0.5 at Balama and a TRIFR of
0.0 at Vidalia, as at 31 December 2021.
The Company’s well-established Health and Safety
Management System includes Critical Hazard Management
Standards which underpin the risk assessment process,
associated controls and management actions. Syrah’s
Critical Hazard Management Standards and rigorous Risk
Management Framework demonstrates that we understand
our major risk exposures and have adequate controls in
place to mitigate critical risks and prevent fatalities. Visible
leadership is a crucial part of ensuring the effectiveness
of the systems and controls we have in place and ensuring
that employees (and contractors alike) understand the
Company’s expectations with regards to safety.
Balama’s Malaria Mitigation Program continued through
2021 aimed at protecting the health and well-being of our
people and reducing lost time due to illness. The program
includes mosquito trapping and mapping, hot and cold
outdoor fogging, regular indoor residual spraying, education
and awareness campaigns, a strictly enforced camp dress
code and Ultra-sensitive Rapid Diagnostic Testing of all
camp residents to identify and treat pre-symptomatic cases
SYRAH RESOURCES > ANNUAL REPORT 2021 of malaria. A total of 5,052 test were conducted in 2021
recovering approximately 345 days that would have otherwise
been lost to illness.
Environment
Syrah is committed to partnering with its stakeholders for
environmental sustainability. We recognise that responsible
management of the impact our business has on the natural
environment can directly, indirectly, or cumulatively impact our
stakeholders, including the livelihoods of local communities.
We strive to achieve environmental sustainability and
responsibility by maintaining our strong ESG performance
and seeking to continually advance our Sustainability
systems and frameworks over time.
During 2021, an independent lifecycle assessment ("LCA")
of Syrah's integrated operations, from Balama origin to
Vidalia AAM customer gate, was completed by Minviro Ltd
in accordance with ISO:14040 and ISO:14044 standards.
LCA is a globally recognised and scientifically validated
methodology to quantify direct and embodied environmental
impacts along the life cycle of a product or process. The
approach incorporates all material and energy inputs
and direct emissions to air, land, and water associated
with the production of a product or process and identifies
environmental hotspots in the production process. Minviro's
LCA estimated that the Syrah's integrated operations exhibit
a materially lower Global Warming Potential compared with
a number of other suppliers of natural graphite and active
anode material. Additionally, the Company is advancing
specific projects, including a solar and battery system at
Balama, and evaluating further opportunities to reduce the
environmental impacts of its operations.
In 2021, Balama’s comprehensive Environmental Monitoring
Program (“EMP”) continued in line with Environmental
License conditions with no significant incidents or major non-
compliances reported to date. Monitoring activities under the
EMP include the measurement of surface and ground water
quality, noise levels, dust levels, geo-hydrology, radiation
and air quality. At Vidalia, all necessary environmental
regulatory requirements are in place for initial expansion to
11.25ktpa AAM production capacity, and approval of a Minor
Air Emissions Permit was received in the December 2021
quarter in readiness for expansion.
Community Development
The Company recognises that maintaining strong
relationships with its key stakeholders will help to ensure
that business activities generate mutual benefit and
continue to have a positive impact on the countries and local
communities in which we operate.
In 2017, Syrah established a Local Development Agreement
(“LDA”) with the Mozambique Government which defines how
the Company will contribute to the sustainable development
of the local community for the duration of the Mining
Agreement across following key areas:
> Education, training and local employment;
> Health promotion and awareness raising;
> Youth and leadership development;
> Agricultural / livelihood development;
> Food / nutrition and water security;
> Maintenance of cultural heritage; and
> Development of vulnerable people
The signing of the LDA necessitated the formation of a
Local Development Committee (“LDC”) to represent the best
interests of the Company’s eight Host Communities and
to oversee the implementation of all Company sponsored
community development projects in line with the commitments
under the LDA.
To ensure the fair and transparent management of
community projects and associated expenditure across
the Company’s eight Host Communities, LDC membership
includes representatives from each of the Host Communities,
Company representatives and Government (District and
Provincial) representatives. It is the responsibility of the LDC
to meet quarterly and collectively decide upon sustainable
development priorities and associated community projects.
Community Investment Guidelines have been developed to
ensure that all community projects put forward by the LDC
are aligned with the commitments under the LDA, provide
mutual benefit for all parties of the LDC, align with Syrah’s
Values, and contribute to advancing the Company’s broader
Community Relations strategy.
Community Development Projects progressed via the LDC
in 2021 include the delivery of a second host community
primary school, the rehabilitation of an arterial community
road, the handover of a central community building, and the
continuation of Sustainable Generation Income Activities such
as vegetable production and poultry farming programs, and
supporting the growth of local associations and collectives.
2021 also saw the commencement of three new large-scale
community projects for Balama, being a wholesale central
market, upgrade works to the Balama Health Centre and
construction of a third primary school.
Community initiatives for Vidalia also continued during 2021
through ongoing stakeholder engagement with community
groups, local academic institutions, local Government
agencies, and local businesses including suppliers and
service providers.
FINANCIAL REVIEW
CONSOLIDATED RESULTS
All financial data presented in this report is quoted in United
States Dollars (US$) unless otherwise stated.
Statement of Comprehensive Income
The loss for the consolidated entity after income tax for the
financial year ended 31 December 2021 was $56.9 million
(2020: loss after income tax of $60.9 million).
Revenue for the year ended 31 December 2021 comprised
sales of natural graphite products of $29.0 million (2020:
$10.8 million) and interest income of $0.1 million (2020: $0.4
million) from cash reserves placed on term deposits during
the year.
Cost of sales reported for the financial period was $61.7
million (2020: $49.3 million), mainly comprised of mining
and production costs of $44.2 million (2020: $28.4 million),
logistics costs of $11.9 million (2020: $9.6 million), and
depreciation and amortisation expense relating to Balama of
$10.2 million (2020: $9.8 million). Total other expenses for the
financial period were $15.3 million (2020: $15.3 million) and
included the following:
> Distribution costs of $7.2 million (2020: $3.9 million), of
which $5.4 million (2020: $1.8 million) were shipping costs;
> Administrative expenses of $9.5 million (2020: $6.6
million), of which $6.6 million (2020: $4.7 million) related to
employee benefits;
9
> Write-down of inventories due to valuation of inventories
at the lower of cost or net realisable value of $1.3 million
(2020: $2.6 million); and
> Offset by other income of $2.7 million (2020: other
expense of $2.2 million) on foreign currency transactions
and balances principally the Australian Dollar (AUD).
Net finance expense of $6.2 million (2020: net finance
expense of $4.4 million) mainly related to interest incurred on
the Convertible Notes of $4.8 million (2020: $3.3 million) and
Leases of $1.1 million (2020: $1.2 million).
Total comprehensive loss for the year was $56.5 million
(2020: $61.7 million).
Statement of Financial Position
Total assets of the consolidated entity as at 31 December
2021 were $428.9 million (2020: $431.9 million), with the
decrease principally as a result of lower current assets
including Cash and Cash Equivalents offset by increases in
Property, Plant and Equipment and Inventories.
The consolidated entity’s Cash and Cash Equivalents as at
31 December 2021 were $52.9 million (2020: $75.0 million)
and working capital, being Current Assets less Current
Liabilities, was $58.1 million (2020: $84.1 million). The
net decrease in Cash and Cash Equivalents and working
capital is a result of operating cash outflow from the Balama
operation through suspended production prior to production
restarting, and development of the Group’s Vidalia Facility.
Mining Assets decreased to $132.8 million as at 31
December 2021 (2020: $134.2 million) mainly due to
amortisation of $3.2 million during the year for Balama assets
and partially offset by increase of $1.4 million in rehabilitation
estimation.
Property, Plant and Equipment increased to $180.5 million as
at 31 December 2021 (2020: $164.4 million), with the majority
relating to capitalisation of the costs associated with Balama
Tailing Storage Facility Cell 2 and progression of the Vidalia
Initial Expansion project.
Non-Current Trade and Other Receivables decreased to
$8.0 million as at 31 December 2021 (2020: $13.2 million)
with the majority relating to outstanding Input Tax Credits
in Mozambique of $3.9 million (2020: $6.8 million). During
the year ended 31 December 2021 cash refunds totaling
$1.2 million were received for Input Tax Credits (2020: $8.6
million).
The consolidated entity also has a deposit of $4.1 million as
at 31 December 2021 (2020: $6.5 million), placed as security
for an environmental guarantee in favour of the Ministry of
Mineral Resources and Energy in Mozambique.
The consolidated entity had total liabilities of $136.4
million as at 31 December 2021 (2020: $99.2 million),
which includes Trade and Other Payables of $19.6 million
(2020: $7.6 million); a provision for decommissioning and
rehabilitation for Balama of $15.0 million (2020: $13.6 million);
a provision for Balama community development of $11.3
million (2020: $11.3 million); Borrowings from the issue of
Convertible Notes including capitalised interest expense and
transaction costs of $69.9 million (2020: $47.5 million) and
Lease Liabilities of $16.2 million (2020: $16.8 million).
Net assets of the consolidated entity decreased during the
financial period to $292.5 million as at 31 December 2021
(2020: $332.8 million).
10
Statement of Cash Flows
Cash Flows from Operating Activities
Net cash outflow from operating activities for the year ended
31 December 2021 was $35.1 million (2020: $32.9 million),
and principally consisted of receipts from the sale of natural
graphite products, offset by payments relating to expenses
from operating Balama, as well as corporate office, compliance
and other employee benefits expenses.
Cash Flows from Investing Activities
Net cash outflow from investing activities was $19.3 million
for the year (2020: $11.8 million) and principally consisted of
payments for progression of the downstream Vidalia Initial
Expansion project.
Cash Flow from Financing Activities
Net cash inflow from financing activities was $32.8 million
during the year ended 31 December 2021 (2020: $38.5 million)
and principally consisted of proceeds received from the
entitlement offer and Convertible Note issuance during the
year, net of transaction costs.
SEGMENT REVIEW
BALAMA GRAPHITE OPERATION
Financial Summary
The segment result for Balama for the year ended
31 December 2021 was EBITDA of -$31.0 million (2020:
EBITDA of -$35.2 million).
This loss principally consisted of Cost of Goods Sold of
$61.7 million (2020: $39.5 million), Write-down of Inventories
due to valuation of inventories at the lower of costs or net
realisable value of $1.3 million (2020: $2.6 million), and
Shipping Costs of $5.4 million (2020: $1.8 million), offset
by Revenue of $29.0 million from sales of natural graphite
products (2020: $10.8 million).
Total segment assets for Balama were $296.3 million as at
31 December 2021 (2020: $295.5 million) and principally
comprised of Mining Assets of $132.8 million (2020: $134.2
million); Property, Plant and Equipment and Right of use Assets
of $101.5 million (2020: $103.6 million), Deferred Tax Assets
of $26.0 million (2020: $27.0 million), and Trade and Other
Receivables of $15.6 million (2020: $14.9 million), The increase
in total segment assets principally relates to higher balance of
Trade and Other Receivables offset by amortisation on Property,
Plant and Mining Assets.
Following are the key activities and achievements at Balama
during the financial year.
Production
Syrah recommenced production at Balama in March 2021
following production being suspended from March 2020 due
to the market and logistics disruptions caused by COVID-19.
Balama demonstrated strong operational performance during
2021 with higher production rates, improved graphite recoveries
and stable grades versus 2019 being reported in campaign
runs. During H2 2021, Balama production was constrained by
maximum finished product inventory positions at Balama and
Nacala and disruption in the global container shipping market.
Total Balama production for 2021 was 72kt (2020 production:
12kt). Syrah developed an additional Pemba breakbulk
shipment option after year end, which is expected to enable
increased production levels and cost economies of scale at
Balama in 2022.
SYRAH RESOURCES > ANNUAL REPORT 2021 Graphite Mineral Resources Estimate
The information in this Annual Statement for the Balama Site that relates to Mineral Resources is based on, and fairly
represents, the ASX announcement dated 31 March 2019 (Annual Report 2019) which was prepared by a Competent Person
(Mr Jonathon Abbot). Mr Abbot is an employee of MPR Geological Consultants Pty Ltd and is an independent consultant to
Twigg Exploration and Mining Limitada. Mr Abbott has sufficient experience that is relevant to the style of mineralisation and
type of deposit under consideration and to the activity which he is reporting to qualify as a Competent Person as defined in the
JORC Code. The Mineral Resource statement has been approved by Mr Abbot and consent provided for inclusion in the report
of the matters based on this information in the form and context in which it appears.
Table 1: Graphite Mineral Resource estimate at 3% Total Graphitic Carbon ("TGC") cut-off grade
As at 31 December 2020
As at 31 December 2021
CLASSIFICATION
TONNES
(Mt)
Balama West
Measured
Indicated
Inferred
Balama East
Measured
Indicated
Inferred
Total
Measured
Indicated
Inferred
639
23.5
255
360
783
-
123
660
1,422
23.5
378
1,020
TGC
(%)
10.0
17.5
10.2
9.3
11.0
-
13.4
10.1
10.0
17.5
11.2
9.8
CLASSIFICATION
TONNES
(Mt)
Balama West
Measured
Indicated
Inferred
Balama East
Measured
Indicated
Inferred
Total
Measured
Indicated
Inferred
638
23
255
360
783
-
123
660
1,421
23
378
1,020
TGC
(%)
10.0
17.5
10.2
9.3
11.0
-
13.4
10.1
10.0
17.5
11.2
9.8
Explanation of material changes:
The figures in this table are rounded to reflect the precision of the estimates and including rounding errors.
The overall reduction in the Ore Resource is due to depletions during 2021 of 0.68 Mt from Balama West. There has been no
production from Balama East.
In addition, the depletion comprising Measured, Indicated and Inferred Resources represents 0.05% change. TGC% remains
unchanged.
Table 2: Vanadium Mineral Resources Estimate
As at 31 December 2020 @ 3% Cut-off
As at 31 December 2021 @ 3% Cut-off
CLASSIFICATION
TONNES
(Mt)
V2O5
(%)
CLASSIFICATION
TONNES
(Mt)
V2O5
(%)
Balama West
Measured
Indicated
Inferred
Balama East
Measured
Indicated
Inferred
Total
Measured
Indicated
Inferred
639
23.5
255
360
783
-
123
660
1,422
23.5
378
1,020
0.20
0.34
0.21
0.20
0.20
-
0.35
0.20
0.20
0.34
0.26
0.20
Balama West
Measured
Indicated
Inferred
Balama East
Measured
Indicated
Inferred
Total
Measured
Indicated
Inferred
638
23
255
360
783
-
123
660
1,421
23
378
1,020
Explanation of material changes:
There has been no measurable material change in the Vanadium Mineral Resource estimate since 2020 Annual Report.
The tonnage of 0.68 Mt decrease is due to depletions during 2021.
0.20
0.34
0.21
0.20
0.20
-
0.34
0.20
0.20
0.34
0.26
0.20
11
Graphite Mineral Reserves Estimate
The information in this Annual Statement for Balama that relates to Ore Reserves is based on, and fairly represents, the ASX
announcement dated 31 March 2019 (Annual Report 2019) which was prepared by Competent Persons (Mr Jon Hudson and
Mr Christopher Hull). The Mineral Resource and Ore Reserve statements has been approved by Mr Jon Hudson, who consents
to the inclusion in the report of the matters based on this information in the form and context in which it appears. Mr Hudson
is an employee of Snowden Mining Industry Consultants Pty Ltd (South Africa) and is a Fellow of the South African Institute of
Mining and Metallurgy.
Table 3: Ore Reserve estimate
As at 31 December 2020 (7.2% TGC cut-off grade)
As at 31 December 2021 (7.2% TGC cut-off grade)
CLASSIFICATION
TONNES
(Mt)
TGC
(%)
GRAPHITE
(MT)
CLASSIFICATION
TONNES
(Mt)
TGC
(%)
GRAPHITE
(MT)
Balama West
59.79
16.86
10.08
Balama West
59.12
16.86
-
59.79
46.98
-
46.98
0.77
-
0.77
107.54
-
-
16.86
14.38
-
14.38
10.84
-
10.84
15.73
-
-
Proved
10.08
Probable
6.76
Balama East
-
Proved
6.76
0.08
Probable
Stockpiles
-
Proved
0.08
Probable
16.92
-
Total
Proved
-
59.12
46.98
-
-
16.86
14.38
-
46.98
14.38
0.94
-
0.94
9.34
-
9.34
9.97
-
9.97
6.76
-
6.76
0.09
-
0.09
107.04
15.71
16.81
-
-
-
Proved
Probable
Balama East
Proved
Probable
Stockpiles
Proved
Probable
Total
Proved
Probable
107.54
15.73
16.92
Probable
107.04
15.71
16.81
Explanation of material changes:
The overall reduction in Ore Reserves of 0.50 Mt change is
due to:
> Depletions during 2021 of 0.68 Mt given that tonnes and
grade factors -6.2% and -1.8% were applied.
> An increase in the end of year Stockpiles of 0.17Mt from
the end of year 2020.
> In addition, the overall reduction comprises Probable
Reserve only and represents 0.5% change.
Governance and Controls Statement
The Company engaged independent consultants to prepare
the mineral resource and reserve estimates.
The consents by the Competent Persons remain in place for
subsequent release by the Company of the same information
in the same form and context, until the consent is withdrawn
or replaced by a subsequent report and accompanying
consent.
The Company confirms that the form and context in which the
Competent Persons’ findings are presented have not been
materially modified from the original ASX announcements.
Sales and Marketing
Sales of natural graphite products significantly increased
in 2021 versus 2020. However, container shipping market
disruption impacted the Company’s ability to secure
container capacity for Balama products on vessels sailing
from Nacala, and to match product sales to underlying
customer demand. Total natural graphite sales for 2021 were
54kt (2020 natural graphite sales: 22kt) at a weighted price
of US$503 per tonne (CIF). A major new logistics option was
developed by the Company after year end to commence
breakbulk shipments through Pemba port. Subject to
performance, Syrah expects to make a number of breakbulk
shipments through 2022, and this will allow the Company
to achieve higher product sales than otherwise may be
achieved solely through Nacala port.
EV sales grew 119% year on year in 2021, significantly higher
than the 44% year on year growth reported in 2020. Chinese
AAM production significantly increased through 2021. In
2021, incumbent EV and battery manufacturing companies
committed to substantially expanding global EV and battery
manufacturing capacity across all geographies including
in the USA. Strong downstream market conditions are
flowing through to natural graphite demand resulting in an
improved upstream market balance. Natural graphite prices
being reported from late 2021 have improved significantly
and Syrah is experiencing significantly increased customer
enquiry.
12
SYRAH RESOURCES > ANNUAL REPORT 2021 VIDALIA FACILITY
CORPORATE
Financial Summary
The segment result for the Vidalia Facility for the year ended
31 December 2021 was EBITDA of -$0.3 million (2020:
EBITDA of -$0.1 million).
Financial Summary
The segment result for Corporate for the year ended
31 December 2021 was EBITDA of -$6.5 million (2020:
EBITDA of -$8.4 million).
Total segment assets for Vidalia Facility were $79.0 million as
at 31 December 2021 (2020: $60.6 million) and principally
comprised of capitalised construction costs for the Vidalia
Initial Expansion Project.
In 2021, Syrah made exceptional progress in its strategy to
become a vertically integrated natural graphite AAM supply
alternative for USA and European customer markets.
The Company commenced fully integrated production of
on-specification AAM from Vidalia, following the installation
and commissioning of a commercial scale furnace on site in
May 2021.
Product qualification activities progressed with target
customers. On-specification AAM and toll treated purified
spherical graphite (anode precursor) produced at Vidalia
was tested by multiple target customers and independent
laboratories. Commercial discussions were advanced in
parallel with qualification processes with selected target
customers. In December 2021, Syrah executed an offtake
agreement with Tesla, Inc to supply natural graphite AAM
from Vidalia4.
The Company awarded Worley Group a detailed engineering
and procurement services contract for the Vidalia Initial
Expansion project, and detailed engineering on this project
was 50% completed by year end. A final investment decision
was approved for the Vidalia Initial Expansion project after
year end and construction has commenced. Worley Group
was awarded a construction management services contract
for the Vidalia Initial Expansion project after year end.
BALAMA VANADIUM PROJECT
In addition to Balama’s substantial graphite Ore Reserves,
the deposit also hosts a significant Vanadium Inferred
Resource of 1.4Bt at 0.2% V2O5.
Vanadium (a designated critical mineral) in the processed
Balama graphite ore, which would otherwise report to
tailings, can be refined into a saleable product (V2O5) and
presents a medium term, high value opportunity.
Balama contains a globally significant Vanadium resource,
with potential for ~5ktpa5 of V2O5 production (vs. 2020 global
production of ~105kt6). A review of the 2014 Vanadium
Scoping Study was completed in 2018 and confirmed that
the project warrants progression to formal Pre-Feasibility
Study ("PFS") stage.
Sampling and analysis of Vanadium content within the
graphite processing circuit was completed in 2019, which
confirmed prior understanding of Vanadium concentrations
in key process streams in the Balama graphite circuit and
will be used to inform metallurgical test work as the project
progresses. Syrah plans to progress the Balama Vanadium
Project with stabilisation in Balama production and cash
flows.
(4) Refer ASX releases 23 December 2021 and 29 December 2021
(5) Scoping study on potential to refine vanadium as per the ASX
announcement dated 30 July 2014. Production rate assumes Balama
operating at full design capacity
(6) https://pubs.usgs.gov/periodicals/mcs2022/mcs2022-vanadium.pdf
This loss principally consisted of employee benefits of $6.6
million (2020: $4.7 million), legal and consulting costs of $1.5
million (2020: $1.1 million), general corporate administration
costs of $1.4 million (2020: $0.7 million) and net finance
expenses of $5.0 million (2020: $3.5 million) mainly related
to interest accrued on Convertible Notes and offset by net
FX income of $2.7 million (2020: net FX expenses of $2.3
million). These costs include ‘non-cash’ costs of $2.8 million
(2020: $1.8 million), relating to share-based payments.
Total segment assets were $53.6 million as at 31 December
2021 (2020: $75.8 million), with the decrease mainly driven
by the lower Cash and Cash Equivalents closing balance.
Corporate segment assets as at 31 December 2021 include
$52.9 million of Cash and Cash Equivalents (2020: $75.0
million) which will be used to fund:
> Ongoing working capital for Balama;
> Additional capital expenditure relating to Balama;
> Capital expenditure relating to the Vidalia Initial Expansion
project; and,
> General corporate and administrative activities.
FUTURE OUTLOOK
The likely developments in Group operations for future
financial years include:
Balama Graphite Operation
Further strengthen Balama’s position in the natural graphite
market, targeting:
> Natural flake graphite production driven by market
demand;
> Average product fixed carbon (“FC”) grade of 95% with
target range of 95% - 97% FC; and,
> Cash (C1) operating cost structure (FOB Port of Nacala)
of US$430 to US$470 per tonne at an annualised
production rate of 180,000 tonnes per annum (15,000
tonnes per month), with 50/50 fixed to variable costs.
Sales and Logistics
Balama product differentiators will continue to be strategically
important through 2022. In particular:
> Product quality (fixed carbon grade, impurities and
particle size distribution);
> Capability as a base load supplier of natural graphite into
the battery anode material supply chain; and,
> Syrah’s best practice ESG credentials.
Vidalia
Progress construction of a 11.25kt per annum AAM facility at
Vidalia, progress qualification and commercial arrangements
with additional target customers and complete a bankable
feasibility study on the potential expansion of Vidalia to 45kt
per annum AAM production capacity.
13
Vanadium Project
The Vanadium resource at Balama is an attractive future
growth option for the company.
Investment to progress the evaluation of the project will be
made upon stabilisation of Balama cash flows.
MATERIAL BUSINESS RISKS
The Group continues to assess and manage various
business risks with the potential to have a material impact
on the Group’s operating and financial performance and its
ability to successfully achieve its corporate objectives. Set out
below are the business risks identified as having the potential
to have a material impact on the Group.
The matters listed below are not listed in order of importance
and are not intended to be an exhaustive list of all the risks
and uncertainties affecting the business.
It should be noted that the Group continues to assess and
manage business risks associated with the COVID-19
pandemic.
MARKET RISK
The demand for, and the price of, natural flake and spherical
graphite is highly dependent on a variety of factors,
including international supply and demand of graphite and
substitutes, the price and availability of substitutes, actions
taken by governments, and global economic and political
developments (including, without limitation, global events
such as the COVID-19 pandemic). Syrah’s operational and
financial performance, as well as the ongoing economic
viability of Balama, is heavily reliant on the price of graphite,
among other things. In this respect, prospective investors
should note that, at present, there is no transparent market for
graphite pricing; rather, prices are negotiated on a bilateral
basis and therefore subject to factors including those set
out below as well as the preferences and requirements of
customers.
Depressed graphite prices and/or the failure by Syrah to
negotiate favourable pricing terms (which may provide for
fixed or market-based pricing) may materially affect the
profitability and financial performance of Syrah.
Further, failure by Syrah to negotiate favourable terms with
agents or other third parties engaged to market and/or sell
graphite and/or of Vidalia graphite products ("Products") on
its behalf, or failure by such agents or third parties to sell
Products at favourable prices, may have a similar effect. Any
sustained low price for Products (or low sale price achieved
by Syrah, whether directly or via agents or other third
parties) may adversely affect Syrah’s business and financial
results, its ability to finance, and the financing arrangements
for its future activities or its planned capital expenditure
commitments.
Key factors which affect the price for the Products (many
of which are outside the control of Syrah) include, among
many other factors, the quantity of global supply of
Products as a result of the commissioning of new mines
and manufacturing facilities, and the decommissioning of
others; political developments in countries which produce
and consume material quantities of Products; the weather
in such countries; the price and availability of substitutes;
advancements in technologies and the uses and potential
uses of the Products, and the demand for the applications
for which the Products may be used (including, for example,
in the steel, manufacturing, construction, and battery
14
industries); the grade, quality and particle size distribution
of the Products produced; and sentiment or conditions in
the countries and sectors in which Syrah and its business/
commercial partners sell or intend to sell the Products.
Such sentiment or conditions are further affected by global
trends and/or events such as the COVID-19 pandemic, and
geopolitical events and conflicts.
Given the range of factors which contribute to the price
of the Products, and the fact that pricing is subject to
negotiation, it is particularly difficult for Syrah to predict with
any certainty the prices at which Syrah will sell its Products.
The effect of changes in assumptions about future prices
may include, amongst other things, changes to Mineral
Resources and Ore Reserves estimates and the assessment
of the recoverable amount of Syrah’s assets.
MINERAL RESOURCES AND ORE
RESERVES
Mineral Resources and Ore Reserves are estimates of
mineralisation that have reasonable prospects for eventual
economic extraction in the future, as defined by the 2012
Edition of the Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves ("JORC
Code"). JORC Code compliant statements relating to Syrah’s
Ore Reserves and Mineral Resources are estimates only. An
estimate is an expression of judgement based on knowledge,
experience and industry practice. Estimates which were valid
when originally calculated may alter significantly when new
information or techniques become available.
In addition, by their very nature, Resource estimates are
imprecise and depend to some extent on interpretations,
which may prove to be inaccurate. As further information
becomes available through additional fieldwork and analysis,
the estimates are likely to change and may be updated from
time to time. This may result in alterations to mining plans or
changes to the quality or quantity of Syrah’s Ore Reserves
and Mineral Resources, which may, in turn, adversely affect
Syrah’s operations.
Mineral production involves risks, which even a combination
of experience, knowledge and careful evaluation may not be
able to adequately mitigate.
No assurance can be given that the anticipated tonnages
or grade of minerals will be achieved during production or
that the indicated level of recovery rates will be realised.
Additionally, material price fluctuations, as well as increased
production and operating costs or reduced recovery rates,
may render any potential mineral Resources or Reserves
containing relatively lower grades uneconomic or less
economic than anticipated, and may ultimately result in
a restatement of such Resource or Reserve. This in turn
could impact the life of mine plan and therefore the value
attributable to mineral inventory and/or the assessment of
recoverable amount of Syrah’s assets and/or depreciation
expense.
Moreover, short term operating factors relating to such
potential mineral Resources or Reserves, such as the need
for sequential development of mineral bodies and the
processing of new or different mineral types or grades, may
cause a mining operation to be unprofitable in any particular
period. In any of these events, a loss of revenue or profit
may be caused due to the lower than expected production
or ongoing unplanned capital expenditure in order to meet
production targets, or the higher than expected operating
costs.
SYRAH RESOURCES > ANNUAL REPORT 2021 OPERATIONAL RISK
During the ramp-up in production volume and the operational
phase of Balama, there is a risk that difficulties may arise as
part of the processing and production of minerals, including
failures in plant and equipment, difficulties in obtaining
and importing replacement equipment, and difficulties with
product liberation, separation, screening, filtration, drying
and bagging.
Other risks during any restart, the subsequent production
ramp-up and operational phase include, and are not
limited to, weather, availability of materials, availability
and productivity of skilled and experienced workers and
contractors, industrial and environmental accidents, industrial
disputes and unexpected shortages or increases in the costs
of labour, consumables, spare parts, plant and equipment
IT failures or disruptions, security concerns globally and
in Mozambique, unanticipated changes in government
regulation and risks associated with increased global
uncertainty and/or global events such as the COVID-19
pandemic (including the national or regional governmental
response to such events). The production ramp-up process
may uncover failures or deficiencies in processes, systems,
plant and equipment required for Balama, and addressing
such failures or deficiencies may result in Syrah incurring
unexpected costs and production ramp-up delays. Any of
these outcomes could have a material adverse impact on
Syrah’s results of operations and financial performance.
In addition, there is a risk that unforeseen geological or
geotechnical issues may be encountered when developing
and mining ore reserves, such as unusual or unexpected
geological conditions, pit wall failures, tailings storage facility
failures, rock bursts, seismicity and cave ins. In any of these
events, a loss of revenue may be caused due to the lower
than expected production and/or higher than anticipated
operation and maintenance costs and/or ongoing unplanned
capital expenditure in order to meet production targets.
Due to the remoteness of Balama, Syrah is subject to
an increased number of risks including a lack of access
to key infrastructure, security requirements, rising
fuel costs, changes to transport route conditions and
requirements, unexpected delays and accidents that
could, singularly or collectively, materially negatively impact
upon Syrah’s financial performance and position. Any
prolonged interruption or negative changes in access to
key infrastructure and logistics processes, including, for
example, road access and integrity, bridge access and
integrity, transport of product to the Port of Nacala, clearing
of product through customs and shipping from the port,
including shipping delays and rescheduling, could have
significant adverse effects on the Company’s ability to
produce and sell product and therefore generate revenue,
and/or the cost of those activities. Further, as Syrah’s primary
asset is located in a remote part of Africa, it is particularly
susceptible to the availability of personnel, specialist
services, parts, equipment and supplies on a timely basis.
Higher than expected inflation rates generally, or specific
to the mining industry in particular, could be expected
to increase operating and capital expenditure costs and
potentially reduce the value of future project developments.
While, in some cases, such cost increases might be offset by
increased selling prices, there is no assurance that this would
be possible. To the extent that such offset is not possible, this
could adversely impact Syrah’s financial performance.
Any inability to resolve any unexpected problems relating to
these operational risks or adjust costs profiles on commercial
terms could adversely impact continuing operations, Mineral
Resources and Ore Reserves estimates and the assessment
of the recoverable amount of Syrah’s assets.
VIDALIA EXPANSION
Expansion of the Vidalia facility is subject to a range of
risks and variables which may impact upon Syrah’s ability to
achieve large scale Active Anode Material production at the
site.
Syrah will rely on a number of third-party contractors to
undertake the expansion of the Vidalia site. If Syrah and
those contractors do not manage the project effectively or
consistently with Syrah’s expectations, construction may be
delayed or cost more than anticipated. Such contractors
may not be available to perform services for Syrah when
required or may only be willing to do so on terms that are not
acceptable to Syrah.
Further, construction may be constrained or hampered by the
contractor’s capacity constraints, mobilisation issues, plant,
equipment, materials and staff shortages, industrial and
environmental accidents, industrial disputes and unexpected
increases in the costs of labour, consumables, spare parts,
plant and equipment, and IT failures or disruptions and other
global trends or events (such as the COVID-19 outbreak
and global geopolitical uncertainty and national or regional
governmental response to such events). In the event that a
contractor underperforms or is terminated by Syrah, Syrah
may not be able to find a suitable replacement on satisfactory
terms within a reasonable time or at all. These circumstances
may have a material adverse effect on the timeliness and
cost of the development and construction of the expansion
at Vidalia.
Further, expansion of the Vidalia operation may not deliver
the volumes, production efficiencies or product quality
expected by Syrah. This could occur where plant and
equipment does not perform as required or as expected,
including in accordance with its nameplate design capacity.
In such circumstances, Syrah maybe required to make
additional investments in plant and equipment.
Delays in construction or underperforming operations could
result in cost overruns, or impact customer arrangements,
which may result in a reduction in revenues, contractual
claims against Syrah by customers, or deteriorating
relationships with customers. Cost overruns may also result in
the plant expansion not delivering the returns Syrah expects,
and as a result negatively impact its financial performance.
SHIPPING CONSTRAINTS
Syrah’s business is being impacted by the disruption
currently being experienced by the global shipping market,
which in part has been caused by the COVID-19 pandemic.
In particular, the Balama Graphite Operation has been
impacted by a vessel and container shortage since mid-
2021, as shipping lines have prioritised vessel capacity
and container allocation to more profitable routes primarily
from Asia to the United States and Europe. As well, there is
competition to secure container allocation in Mozambique,
primarily coming from the agriculture sector. Further impacts
include scheduling uncertainty, shipping cost increases, and
delivery delays which may impact customer payment timing,
and the ability to meet customer delivery timing requirements.
15
As a result, Syrah’s capacity to ship graphite from the Balama
Graphite Operation in Mozambique in a timely manner is
currently significantly constrained. Due to these constraints,
Syrah has in some cases been forced to delay shipping
graphite to customers, which has adversely impacted the
timing and recognition of sales. As well, limited availability
of shipping services may cause Syrah to moderate its
production levels if sufficient warehouse capacity cannot be
utilised while shipping services are secured. Shipping costs
have also increased significantly, and such costs cannot
always be passed onto Syrah’s customers.
As an alternative, Syrah is planning to implement break bulk
shipping services in addition to container shipping services.
Break bulk shipping is on a voyage charter basis directly
with the ship owner, and may be exposed to additional costs
if planned loading or discharge rates are not achieved (the
demurrage rate).
The risk of Syrah incurring such fees may be heightened
given the need for service providers and customers to
develop experience in bulk handling, potential port delays
due to COVID-19 and related impacts, or unpredictability in
vessel scheduling and transit times.
Syrah’s Vidalia facility is also importing equipment from
China for use in construction of the Vidalia Initial Expansion,
which may also be impacted by global shipping conditions
including costs and delays.
OFFTAKE AGREEMENTS
As announced to ASX on 23 December 2021 and 29
December 2021, Syrah entered into an offtake agreement
with Tesla, Inc. to supply 8kt per annum of natural graphite
Active Anode Material from Vidalia. The offtake obligation
is subject to the conditions described in those ASX
announcements being satisfied. If any of the conditions
are not satisfied, then the agreement with Tesla may
be terminated, which would result in significant excess
production capacity at Vidalia.
Further, while Syrah will seek to secure other offtake
agreements in respect of the excess production capacity
not taken by Tesla, there is no certainty that Syrah will be
able to enter into such agreements in a timely manner, with
acceptable parties, for sufficient volumes or on reasonable
terms with new customers. Any of these circumstances may
adversely impact Syrah’s financial performance and position
including by resulting in Syrah generating less revenue than
anticipated.
COUNTERPARTY RISK
The ability of Syrah to achieve its stated objectives will
depend on the performance of contractual counterparties.
Syrah has entered into sales, marketing and distribution
agreements for Balama, and will seek to renew or replace
contracts in order to match anticipated production over
time or as those agreements approach their respective
expiry dates. Global demand may fluctuate (based on steel
production, electric vehicle and energy storage system
battery demand in particular) and there is no guarantee that
sales forecasts or timing will be achieved, or that supply and
demand analysis will be accurate.
The agreements are a mix of term agreements and spot sale
agreements. Syrah’s revenue and profitability depends on
counterparties performing on their obligations under such
agreements, and on counterparties with term agreements
continuing to enter into new agreements at the end of the
existing term and spot sale counterparties entering into new
sales. Global events and/or trends such as the COVID-19
pandemic may also affect the ability of Syrah’s customers
to carry out their obligations under such agreements and/or
influence renewal or subsequent contracting decisions.
In addition, the sale of Products by Syrah is subject to
commercial verification and qualification processes to ensure
any Products produced meet the specifications for industrial
supply required by customers (including the industrial
graphite markets and the battery sector). The qualification
process may require approval from multiple parties in the
supply chain and not just those parties with whom Syrah
has contractual arrangements. Failure of Syrah’s Products to
qualify for purchase, or any unanticipated delay in qualifying
Syrah’s Products, may adversely impact Syrah’s financial
performance and position (including by resulting in Syrah
generating less revenue or profit than anticipated and/or
incurring higher costs than anticipated).
Syrah has entered into various agreements for Balama and
the Vidalia Initial Expansion project (including the supply of
key goods and services including diesel fuel supply, logistics,
equipment supply, contract mining, engineering and other
services). Risks associated with such agreements, some of
which have arisen, include rising contract prices as well as
disputes regarding variations, extensions of time and costs,
and global events impacting contract performance and
liability (such as the COVID-19 pandemic and geopolitical
events and conflicts) all of which may give rise to delays
and/or increased costs. Furthermore, the risk of variations
in contract prices is a function of the inclusion of certain
‘rise and fall’ provisions in some of Syrah’s operational
agreements. Such provisions provide a mechanism by which
prices charged for certain inputs are periodically adjusted
based on movements in certain indices. Should any of these
risks materialise, this could have a material adverse impact
on Syrah’s profitability, financial performance and position.
If Syrah’s counterparties default on the performance of their
respective obligations, for example if the counterparty under
a sales agreement defaults on payment or a supplier defaults
on delivery, unless Syrah is protected by a letter of credit
(which is often, but not always the case in sales agreements),
it may be necessary to approach a Mozambican or other
international court to seek enforcement or some other legal
remedy, if no alternative settlement can be reached. Such
legal action can be uncertain, lengthy and costly. There is
a risk that Syrah may not be able to seek the legal redress
that it could expect under Australian law against a defaulting
counterparty, or that a legal remedy will not be granted on
satisfactory terms.
HEALTH, SAFETY, ENVIRONMENT AND
COMMUNITY
Environmental regulations in the jurisdictions in which Syrah
has operations impose significant obligations on companies
that conduct the exploration for and mining of commodities.
These regulations also cover the processing of ores into final
products and subsequent transportation of those produced
minerals as well as the possible effects of such activities
upon the environment and local communities.
16
SYRAH RESOURCES > ANNUAL REPORT 2021 Syrah must comply with all known standards, existing laws,
and regulations in each case which may entail greater or
lesser costs and delays depending on the nature of the
activity to be permitted and how vigorously and consistently
the regulations are administered by the local authorities.
There are inherent environmental risks in conducting
exploration and mining activities, giving rise to potentially
substantial costs for environmental rehabilitation, damage
control and losses. These risks include the occurrence
of incidents such as uncontrolled tailings containment
breaches, subsidence from mining activities, escape
of polluting substances and uncontrolled releases of
hydrocarbons that may lead to material adverse impacts on
Syrah's people, host communities, assets and/or Syrah’s
licence to operate.
Changes in environmental laws and regulations or their
interpretation or enforcement may adversely affect Syrah’s
operations, including the potential profitability of its
operations. Further, environmental legislation is evolving
in a manner which may require stricter standards and
enforcement (with associated additional compliance costs)
and expose relevant operators to the risk of increased
fines and penalties for non-compliance, more stringent
environmental assessments of proposed projects and a
heightened degree of responsibility for companies and their
officers, directors and employees. There is no assurance that
future changes in environmental regulation, if any, will not
adversely affect Syrah’s operations.
Syrah currently holds an environmental license for Balama
(due to expire on 1 January 2025), having successfully
renewed this license for a further five-year period in January
2020. Renewal of the license is conditional on the update
and resubmission of the environmental management plan
and monitoring program. Syrah’s practices are reflected
in the ISO14001 and OHSAS:18001 certification status.
However, there are no guarantees that environmental issues
or concerns will not arise. If such issues or concerns were
to arise, this may have an adverse effect on Syrah’s ability to
operate, reputation and relationships with key stakeholders,
which may in turn negatively impact its financial and
operational performance.
Syrah is also required to close its operations and rehabilitate
the lands that it disturbs in accordance with environmental
licence conditions and applicable laws and regulations.
A closure plan and estimate of closure and rehabilitation
liabilities have been prepared for Balama. These estimates
of closure and rehabilitation liabilities are based on current
knowledge and assumptions however actual costs at the
time of closure and rehabilitation may vary. In accordance
with licence conditions Syrah is also progressively placing a
guarantee in favour of the Ministry of Mineral Resources and
Energy in Mozambique, a bank guarantee in relation to the
rehabilitation or removal of project infrastructure as per the
mine closure plan for Balama.
For the current Vidalia facility in the USA, all regulatory air
and water environmental discharge requirements have
been met based on current qualification volumes. For the
11.25ktpa AAM facility, Syrah has obtained the additional
permits in relation to air source emissions, water discharge,
and/or hazardous materials.
There can be no guarantee that Syrah will be able to
successfully obtain, maintain or renew relevant authorisations
in a timely manner or on acceptable terms to support its
ongoing activities. An inability to obtain and maintain the
necessary titles, authorisations, permits and licences could
have a material adverse effect on the Vidalia operations and
the recoverable amount of assets.
Mining, construction, production and logistics are potentially
hazardous activities. There are numerous occupational health
risks associated with mining and production operations
and associated supporting activities such as logistics. If
any injuries or accidents occur, this could have negative
employee, community and/or financial implications for Syrah
including potential delays or stoppages in mining, production
and/or logistics activities. In addition, the location of Balama
means Syrah’s employees and contractors could be affected
by mosquito borne diseases such as malaria which could
adversely impact operations.
Changes in health, safety and environmental laws and
regulations or their interpretation or enforcement or
unexpected global health risks and/or events (such as
the COVID-19 pandemic) may adversely affect Syrah’s
obligations and/or operations.
Syrah’s mining activities may cause issues or concerns with
the local community in connection with, among other things,
the potential effect on the environment as well as other social
impacts relating to employment, use of infrastructure and
community development.
In response to such risks, Syrah has signed a Community
Development Agreement with local key stakeholders
and established ongoing engagement and management
programs focused on optimising positive impacts and
minimising the risk of negative impacts on the community.
However, these programs are no guarantee that other issues
or concerns will not arise with the local community. If such
issues or concerns were to arise, this may have an adverse
effect on Syrah’s reputation and relationships with key
stakeholders, which may in turn negatively impact its financial
and operational performance.
SOVEREIGN RISK
Syrah’s operations could be affected by political instability
in Australia, Mozambique, the USA, UAE, China, or other
countries or jurisdictions in which it has operations,
investment interests, conducts exploration activities or has
sales into. Syrah is therefore subject to the risk that it may not
be able to carry out its operations as it intends or to ensure
the security of its assets and its people. Syrah is subject to
the risk of, among other things, loss of revenue, property
and equipment as a result of expropriation, war, insurrection,
civil disturbance, acts of terrorism, geopolitical uncertainty,
political/civil unrest, violent criminal acts and displacement
of people that has taken place as a result of this activity in
the north of Mozambique. While this area of Mozambique is
more than 300km from the Balama Graphite Operation and
such incidents are currently confined to such parts, there is
no certainty that will always be the case. Accordingly, Syrah
has significant security measures and protocols in place,
however such security measures and protocols does not
guarantee that such risks will not arise.
As with any mining operation, Syrah is also at risk of natural
disasters, both to the mine site and also to the logistics
chain, which may include among other matters, abnormal
or severe weather conditions, floods, cyclones and other
natural disasters or unexpected global trends (such as the
COVID-19 pandemic).
The effect of these risks is difficult to predict and any
combination of one or other of the above may have a material
17
adverse effect on Syrah. Syrah has a limited ability to insure
against some of these risks and other ‘force majeure’
risks (such as natural disasters, or geopolitical events and
conflict).
Syrah’s primary asset is located in Mozambique and so it
is subject to risks associated with operating in that country.
Risks of operations in Mozambique may include economic,
social or political instability or change, hyperinflation,
widespread health emergencies or pandemics, reduced
convertibility of local currency, sovereign loan default or
collapse of the country’s financial system, difficulty in
engaging with the local community, instability and changes
of law affecting foreign ownership, government participation,
taxation, working conditions, rates of exchange, exchange
control, exploration licencing, export duties, security unrest,
repatriation of income or return of capital, environmental
protection, mine safety, labour relations as well as
government control over mineral properties or government
regulations that require the employment of local staff or
contractors or require other benefits to be provided to local
residents.
The occurrence of these various factors and uncertainties
cannot be accurately predicted and could have an adverse
effect on the operations, profitability or the recoverable
amount of the assets of Syrah.
REGULATORY RISK
Syrah’s businesses are subject, in each of the countries
in which it operates, or the countries into which it sells its
Products, to various national and local laws and regulations
relating to, among other things, construction, exploration
and mining activities as well as the import, export, marketing
and sale of goods. A change in the laws which apply to
Syrah’s businesses or the way in which they are regulated, or
changes to the laws affecting the sale of the Products such
as trade sanctions or tariffs could have a material adverse
effect on the carrying value of material assets or otherwise
have a material adverse effect on Syrah’s businesses and
financial condition.
The Balama Graphite Operation is subject to the laws of
Mozambique. Under those laws, certain rights are granted
in favour of the Mozambique Government and certain
obligations imposed on Syrah.
To manage the impact of this risk, Syrah through its
subsidiary, has entered into a binding and enforceable
agreement with the Mozambique Government (“Mining
Agreement”). The Mining Agreement consolidates all
prior project documents and approvals. It also provides
the Company with clarity around the governing laws and
contractualises the mining rights and other obligations for
Balama in Mozambique. A summary of the key commercial
terms of the Mining Agreement can be found in the
Company’s ASX Release dated 27 September 2018. Syrah’s
operations could be adversely affected by government
actions in Mozambique which alter the terms or operation
of the Mining Agreement in respect of Balama or otherwise
impact upon the manner in which Syrah conducts its
operations and/or Syrah’s relationship with, and obligations
to, the Mozambique Government. Such government action
could adversely impact Syrah’s financial and operational
performance and its financial position, in particular if it results
in an increase in royalty payments, taxes or similar payments
that Syrah is required to make or if it otherwise reduces the
proportion of revenues or profits derived from Balama which
Syrah is entitled to retain.
18
Syrah’s business activities are also subject to obtaining, and
maintaining the necessary titles, authorisations, permits and
licences and associated land access agreements with the
local community and various levels of Government which
authorise those activities under relevant laws and regulations.
There can be no guarantee that Syrah will be able to
successfully obtain, maintain or renew relevant authorisations
in a timely manner or on acceptable terms to support its
ongoing activities. An inability to obtain and maintain the
necessary titles, authorisations, permits and licences could
have a material adverse effect on the carrying value of
material assets or otherwise have a material adverse effect on
Syrah’s businesses and financial condition.
LIQUIDITY AND CAPITAL MANAGEMENT
Syrah's continued ability to operate its business and
effectively implement its business plan over time will depend
in part on its ability to generate free cash flow, to raise
funds for operations and growth activities and to service,
repay and refinance debts as they fall due. While the Group
is producing saleable Products from Balama, it is not yet
cash flow positive. Syrah may require additional financing,
in addition to cash reserves, to meet operation and capital
expenditure requirements for Balama, Vidalia Facility
activities and general administrative expenditures, as well as
acquisitions and new or existing projects. This includes any
further optimisation projects (including Vanadium) at Balama
for which Syrah may require additional funding in the future to
execute on that strategy.
While Syrah believes there are a number of funding
alternatives (which may include both debt and equity sources
of funding), there can be no guarantee that Syrah will be able
to raise additional funding on acceptable terms or at all. An
inability to obtain finance on acceptable terms or at all may
cause, among other things, substantial delays in, or prevent,
the operation of Balama, potential Vanadium development,
the Vidalia plant and/or the development of Syrah’s Vidalia
strategy.
To the extent that Syrah does require funding for its future
capital needs, the availability and terms of such funding
are uncertain and may be less favourable to Syrah than
anticipated, which may negatively impact Syrah’s future
profitability and financial flexibility. Funding terms may also
place restrictions on the manner in which Syrah conducts its
business and impose limitations on Syrah’s ability to execute
its business plan and growth strategies (including its Vidalia
strategy).
Under the terms of the Convertible Notes issued to
AustralianSuper in accordance with their terms as
summarised in Syrah’s ASX announcements of 19 June
2019 and 10 December 2020, there is a possibility that the
Notes may need to be redeemed (wholly or in part) either
at maturity or earlier in accordance with the terms of the
Convertible Notes. Specifically, Syrah may be required to
redeem the Notes for cash, if: (i) AustralianSuper has not
elected to convert the Convertible Notes prior to maturity (5
years from issue); (ii) a third party takeover offer or scheme
of arrangement in respect of all of the shares of Syrah
becomes unconditional, and AustralianSuper does not elect
to convert the Convertible Notes into fully paid ordinary
shares of Syrah; or (iii) AustralianSuper elects to redeem
rather than convert the Convertible Notes in connection with
an event of default (which includes customary events such
as in relation to failure to repay amounts due, insolvency
events, committing an event of default under any of its
debt financing arrangements over an agreed cap, liabilities
SYRAH RESOURCES > ANNUAL REPORT 2021 over an agreed cap, fundamental and material changes to
business undertaking, ceasing to be listed on the ASX or any
breach of warranty or representation).
IMPAIRMENTS
An adverse change in any of the significant assumptions
used to determine the recoverable amount of the Company’s
non-current assets (including commodity price expectations,
foreign exchange rates, discount rates, reserves and
resources, and expectations regarding future operating
performance and capital requirements) may give rise to the
potential for impairment. The carrying amount of assets
is tested against the recoverable amount where a trigger
for impairment is identified. A trigger for impairment may
include the market capitalisation of the Company compared
to the net book value of the assets. A summary of the key
assumptions used to determine recoverable amount can be
found in the Company’s 2020 Annual Report and the Interim
Financial Statements for the period ending 30 June 2021.
WATER SOURCES
Any restrictions on Syrah’s ability to access water may
adversely impact the costs, production levels and financial
performance of its operations. There is no guarantee that
there will be sufficient future rainfall, or that the water level
at the Chipembe Dam will be sufficient, to support Syrah’s
water demands in relation to its sites and operations or
that access to water will otherwise remain uninterrupted.
Likewise, the availability of water for the Vidalia plant cannot
be guaranteed. Any interruption to water access could
adversely affect production and Syrah’s ability to develop or
expand projects and operations in the future.
In addition, and while there are potential alternative water
sources, there can be no assurance that Syrah will be able
to obtain access to them on commercially reasonable terms
or at all in the event of prolonged drought conditions or other
interruptions to existing water access arrangements.
KEY PERSONNEL AND LABOUR MARKET
RISK
Syrah has a number of key management personnel on
whom it depends to manage and run its business. From
time to time, Syrah will require additional key personnel or
operational staff. In addition, Syrah has certain obligations
regarding employment of local labour. The loss of any key
personnel, coupled with any inability to attract additional or
replacement suitably qualified personnel or to retain current
personnel, could have a material adverse effect on Syrah’s
operational and financial performance. This difficulty may be
exacerbated given the remoteness of facilities, the lack of
infrastructure in the nearby surrounding areas (in respect of
Balama), variability in production profiles and strategies in
response to market conditions, the shortage of local, readily
available skilled labour and global events/trends (such as
the COVID-19 pandemic or geopolitical events and conflict),
including the national or regional governmental response to
such events, which may impact a number of factors including
but not limited to personnel availability, mobility and health
and safety. A limited supply of skilled workers could lead to
an increase in labour costs and Syrah being ultimately unable
to attract and retain the employees it needs. When new
workers are hired, it may also take a considerable period of
training and time before they are equipped with the requisite
skills to work effectively and safely.
CURRENCY AND EXCHANGE RATE RISK
Syrah’s activities may generate revenues, and Syrah may
incur expenses, in a variety of different currencies, meaning
its financial performance and position are impacted
by fluctuations in the value of relevant currencies and
exchange rates. In particular, Syrah is required to make
certain payments under contracts for Balama in the local
Mozambique currency. A lack of liquidity or depreciation in
the value of the local Mozambique currency, or the failure of
or difficulties in implementing exchange control mechanisms
in Mozambique, could adversely impact the financial position
and performance of Syrah, including by making it more
difficult or costly to convert the local currency or transfer
funds out of Mozambique. In addition, to date Syrah has
raised capital in Australian dollars, while development costs
are largely in US Dollars or other currencies. Syrah may also
hold funds on deposit in a number of currencies. Changes
in exchange rates may impact the extent to which Australian
dollar denominated capital is able to fund development
in other currencies. Syrah’s natural graphite products are
denominated in US Dollars, with a significant portion of sales
to customers in China. Fluctuations in the value of the US
Dollar may impact the competitiveness of Syrah’s products
to these customers. Syrah also purchases equipment and
services for Balama and the development of Vidalia from
a number of countries, which may also be impacted by
currency fluctuations against the US Dollar in particular.
COMPETITION
Competition from other international graphite producers
and explorers may affect the potential future cash flow and
earnings which Syrah may realise from its operations. This
includes competition from existing production and new
entrants into the market. The introduction of new mining and
processing facilities and any increase in competition and
supply in the global graphite market could lower the price of
this commodity. Syrah may also encounter competition from
other mining and exploration companies for the acquisition
of new projects required to sustain or increase its potential
future production levels. Syrah’s downstream Vidalia Facility
may also be impacted by new entrants to the market, or
existing graphite producers, pursuing a similar strategy aimed
at qualifying spherical graphite or other AAM products for
battery purposes.
TAX AND CUSTOMS RISK
Syrah is subject to taxation and other imposts in Australia,
Mozambique, the USA and the UAE, as well as other
jurisdictions in which Syrah has activities, sales and
investments. Changes in taxation, customs or importation
laws (including double taxation treaties, royalties and similar
levies, transfer pricing, tariffs and duties), or changes in
the interpretation or application of existing laws by courts
or applicable revenue authorities, may affect the taxation
or customs treatment of Syrah’s business activities and
adversely affect Syrah’s financial condition.
Syrah’s international contractual arrangements, asset, liability,
revenue and expense recognition and taxation administration
requires management judgment in relation to the application
of tax laws in a number of jurisdictions. There are many
transactions and calculations undertaken during the ordinary
course of business where the ultimate tax determination is
uncertain or in relation to which tax authorities or adjudicating
bodies may take a view which is different to the view taken by
Syrah. Syrah recognises liabilities for tax, and if applicable
taxation investigation or audit issues, based on whether tax
19
will be due and payable. Where the taxation outcome of such
matters is different from the amount initially recorded, such
difference will impact the current and deferred tax positions
in the period in which the assessment is made.
Further, there may be delays in processing tax or duty
rebates or refunds for which Syrah has applied. Should
it become unlikely that Syrah will recover such rebates or
refunds, this could also adversely affect Syrah’s financial
condition and require a reclassification of assets or
recognition of expenses in Syrah’s accounts.
The revenue and profit from Balama will be subject to certain
payments to the Mozambique Government (including in the
form of taxes and royalties) as provided for in the Mining
Agreement (see above).
INSURANCE RISKS
Syrah maintains insurance coverage as determined
appropriate by its Board and management, but no assurance
can be given that Syrah will continue to be able to obtain
such insurance coverage at reasonable rates (or at all)
for certain events, or that any coverage it obtains will be
adequate and available to cover all claims.
LITIGATION
Syrah may be involved in litigation and disputes from time
to time with its contractors, sub-contractors and other
parties. Litigation and disputes can be costly, including
amounts payable in respect of judgments and settlements
made against, or agreed to by, Syrah. They can also take
up significant time and attention from management and
the Board. Accordingly, Syrah’s involvement in litigation
and disputes could have an adverse impact on its financial
performance and position.
GLOBAL ECONOMIC CONDITIONS
Economic conditions, both domestic and global, may
affect the performance of Syrah. Adverse changes in
macroeconomic conditions, including global and country
specific growth rates, the cost and availability of credit, the
rate of inflation, interest rates, exchange rates, government
policy and regulations, general consumption and consumer
spending, input costs, employment rates and industrial
disruptions, other significant global matters (such as the
COVID-19 pandemic and geopolitical events and conflict)
among others, are variables which while generally outside
Syrah’s control, may result in material adverse impacts
on Syrah’s businesses and its operational and financial
performance, and position.
CLIMATE CHANGE RISK
Syrah recognises that the physical and transitional impacts
of climate change may affect its assets, productivity,
supply chains, markets and communities. Syrah is likely
to benefit in a number of ways from approaches taken to
mitigate impacts from climate change, most notably from
a market perspective where the supply chain in which we
operate is critical to efforts to electrify the transport sector
globally, while the use of natural graphite in the anode
of a Lithium-Ion battery is typically regarded as the best
alternative from an environmental perspective. Both transport
sector electrification and recognition of natural graphite’s
environmental advantages will likely provide a strong
foundation for demand for our products, with an integrated
Balama and Vidalia supply chain solution providing an
attractive complementary source of supply. There are also
a number of risks relating to climate change which are
discussed in more detail below. Syrah understands that
close monitoring and continued focus on this is important.
Sound risk management practices and strategic planning
are integrated across all areas of our business, leveraging
technology to drive long term value from our projects.
The climate-related physical risks identified as applicable to
our business are as follows:
Energy and emissions:
We keep informed of changing regulations, including policy,
codes and principles to help manage transition risk. We
engage with our community and stakeholders to ensure we
are operating in a manner reflecting broader requirements
and our license to operate. We remain agile in response
to changing markets and explore innovative technology
including renewables to improve our resilience to resource
financial and supply uncertainty, including but not limited to
the recent announcement relating to the intention to use solar
energy to support the energy requirements for our Balama
operation. We contribute positively to local, regional and
national sustainability efforts.
Water security:
Production is reliant on the availability of water. In the
short term, Syrah is adapting to a changing water security
environment by working towards reducing demand and
reusing a greater portion of water, including drinking water. In
the medium to long term, we are assessing alternatives to our
current uses of water, including tailings.
Extreme weather events:
We aim to minimise the impact of extreme weather events
on our operations through business continuity planning. This
includes the consideration of potential climate impacts on the
operation of our existing facilities, as well as the design and
construction of new assets.
Extreme health events:
The events of COVID-19 have impacted globally and have
highlighted the need to act early and collectively to mitigate
these impacts. We have established COVID-19 protocols
across all areas of our business. We also recognise that we
must remain prepared to manage these events and support
the communities in which we operate with their recovery
efforts. We have integrated this into our scenario plans and
financial assessments.
20
SYRAH RESOURCES > ANNUAL REPORT 2021 RISK MANAGEMENT
Syrah has developed and implemented a Risk Management
Framework, endorsed by the Board of Directors and relevant
sub-committees (which is subject to annual review), within
which:
> An over-arching risk management policy, which sets out
its commitment to and the expected behaviours required
of its employees and contractors. This is supported by a
number of other more specific business policies that set
out other key requirements of employees and contractors;
> A risk management process and risk assessment criteria
that defines the key steps required to identify, analyse,
treat, evaluate controls and monitor and report on the
risks listed above and other risks on an ongoing basis;
> Risk tolerance and escalation criteria are specified;
> Accountabilities and responsibilities for overseeing,
managing and monitoring these risks and other identified
risks are clearly defined;
> Key priorities for management of risks are identified on a
regular and ongoing basis; and
> Material or potentially material incidents that arise are
reviewed and appropriate action taken.
The Executive Management team, and the Board, through
its sub-committees; the Audit and Risk Committee, the
Sustainability Committee and the Remuneration, Nomination
and Governance Committee, regularly review the Company’s
risks and the effectiveness of the Company’s management
of those risks. The Board, with Executive Management’s
input, regularly consider the nature and extent of the risks
the organisation is prepared to take to meet the Company’s
objectives.
Other key management mechanisms for the Company
include:
> Health, Safety and Environmental management systems
across the organisation;
> Crisis and Emergency management and business
continuity systems;
> Anti-Bribery & Corruption Policy and processes, and
other processes to support business integrity and
compliance; and
> Appropriate insurance programs to provide efficient and
effective levels of risk transfer.
COVID-19 PANDEMIC
The outbreak in late 2019 of a novel strain of coronavirus
(“COVID-19”) has triggered a global downturn and global
economic contraction, causing disruptions in demand and
supply chains.
On 11 March 2020, the World Health Organisation declared
the COVID-19 outbreak a pandemic.
A significant proportion of Syrah’s revenues are generated
by sales of natural graphite products to customers in China,
and Syrah sources a range of supplies and equipment from
companies in China. At the onset of the pandemic COVID-19
impacted a range of sectors of the Chinese economy, and
the global economy, including Syrah’s direct customers and
suppliers, the electric vehicle supply chain including battery
manufacturing, consumer demand for electric vehicles,
people movement, and logistics. All the countries in which
Syrah operates have implemented restrictions on business
activities and people movement, including Mozambique
where measures were implemented which restricted people
movement both internationally and domestically.
The operations of Syrah have therefore been impacted
by the COVID-19 pandemic, most notably resulting in the
suspension of production at the Balama Graphite Operation
from 28 March 2020 due to ongoing impacts of COVID-19,
and the temporary closure of the Vidalia facility from 24
March 2020 to 4 May 2020, specifically due to:
> Ongoing travel restrictions, limiting the mobility of the
Balama workforce, the Vidalia workforce, Management
and Board; and,
> Weak end user demand due to lockdowns, mobility
restrictions and economic uncertainty negatively
impacting EV sales, particularly in the first half of 2020.
Syrah announced the restart of production at Balama on 16
March 2021 however the COVID-19 pandemic is still ongoing
and the actual extent of the pandemic and its impact on
domestic, regional and the global economy remain uncertain.
The spread of COVID-19 globally may impact the financial
performance and future growth of Syrah due to other
longer term adverse economic impacts. Influencing factors
outside the Group’s control include the level of government
support, restrictions on movement and travel imposed by
governments, the extent of spread of COVID-19 in Syrah’s
specific countries of operation and how well these countries
manage these health and economic impacts.
The ongoing impact of the COVID-19 pandemic on Syrah’s
operations is not currently ascertainable and could continue
to have a detrimental effect on Syrah’s financial performance,
and depending on the extent of the disruption, any such
effect could be material to Syrah.
COMMUNITY RELATIONS
Syrah’s mining and industrial materials processing activities
may cause issues or concerns with the local community in
connection with, among other things, the potential effect
on the environment as well as other social impacts relating
to employment, use of infrastructure and community
development.
Syrah has established ongoing engagement and
management programs focused on optimising positive
impacts and minimising the risk of negative impacts on the
community at Balama and Vidalia. However, these programs
are no guarantee that other issues or concerns will not
arise with the local communities. If such issues or concerns
were to arise, this may have an adverse effect on Syrah’s
reputation and relationships with key stakeholders, which
may in turn negatively impact its financial and operational
performance.
SIGNIFICANT CHANGES IN STATE OF
AFFAIRS
There were no significant changes in the nature of activities
or the state of affairs during the current financial year other
than those included in the Review of Operations.
21
MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR
Following Syrah’s announcement in December 2021 regarding the execution of an offtake agreement to supply AAM from
Vidalia, on 7 February 2022, Syrah announced that the final investment decision had been taken for Vidalia’s initial expansion
to 11.25ktpa AAM production capacity. This decision advances Syrah’s strategy to become a vertically integrated natural
graphite AAM supplier for USA and European battery supply chain participants and OEM customers. At the same time, Syrah
announced a fully underwritten institutional placement (Placement) and a 1 for 5.9 pro rata accelerated non-renounceable
entitlement offer (Entitlement Offer) to raise A$250 million (US$178 million). On 9 February 2022, Syrah announced the
successful completion of the Placement and the Institutional Entitlement Offer raising approximately A$125 million (US$89
million) and A$68 million (US$47 million) respectively. On 3 March 2022, Syrah announced the completion of the Retail
Entitlement Offer. Valid applications from eligible retail shareholders for new shares under the Retail Entitlement Offer, and the
issue of new shares to sub-underwriters, representing entitlements that were not taken up by eligible retail shareholders under
the Retail Entitlement Offer and entitlements of ineligible foreign retail shareholders, raised approximately A$57 million
(US$40 million).
No other events have occurred subsequent to 31 December 2021 that has significantly affected, or may significantly affect the
Group’s operations, the results of those operations, or the state of affairs in future financial periods.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS
Commentary on likely developments and expected results of operations is set out in the Review of Operations.
MEETINGS OF DIRECTORS
The number of meetings of the Company’s Board of Directors and of each Board Committee held during the financial year
ended 31 December 2021, and the number of meetings attended by each Director was:
DIRECTOR
BOARD
AUDIT AND RISK
COMMITTEE
SUSTAINABILITY
COMMITTEE
J Askew
S Verner
J Caldeira
L Bahash
S Watts
J Beevers
A
9
9
9
9
9
9
B
9
9
9
9
9
9
A
-
-
4
-
4
4
B
-
-
4
-
4
4
A
4
-
4
4
-
-
B
4
-
4
4
-
-
REMUNERATION,
NOMINATION AND
GOVERNANCE
COMMITTEE
A
4
-
-
4
-
4
B
4
-
-
4
-
4
(A) Number of meetings attended, during the time the Director held office or was a member of the committee during the year ended 31 December
2021.
(B) Number of meetings held during the time the Director held office or was a member of the committee during the year ended 31 December 2021.
22
SYRAH RESOURCES > ANNUAL REPORT 2021 REMUNERATION REPORT
The Remuneration Report contains
details of remuneration paid to the
Non-Executive Directors, Executive
Directors and Key Management
Personnel of the Group as well
as the remuneration strategy and
policies that were applicable in the
financial year ended 31 December
2021. The remuneration report is
structured as follows:
(A)
REMUNERATION GOVERNANCE
(B)
DIRECTOR AND KEY MANAGEMENT PERSONNEL DETAILS
(C)
KEY REMUNERATION OUTCOMES AND UPDATES
(D)
REMUNERATION STRATEGY AND PHILOSOPHY
(E)
REMUNERATION COMPONENTS
(F)
DETAILS OF REMUNERATION EXPENSES
(G)
EXECUTIVE SERVICE AGREEMENTS
(H)
(I)
(J)
TERMS AND CONDITIONS OF SHARE-BASED PAYMENT
ARRANGEMENTS
DIRECTORS AND KEY MANAGEMENT PERSONNEL EQUITY
HOLDINGS
OTHER TRANSACTIONS WITH DIRECTORS AND KEY MANAGEMENT
PERSONNEL
(K)
ADDITIONAL INFORMATION
23
(A) REMUNERATION GOVERNANCE
REMUNERATION, NOMINATION AND GOVERNANCE COMMITTEE
The Board has established a Remuneration, Nomination and Governance Committee consisting solely of independent, Non-
Executive Directors to assist the Board in achieving its objective in relation to the following:
> having a Board of an effective composition, size and commitment to adequately discharge its responsibilities and duties;
> having coherent remuneration policies and practices to attract and retain executives and directors who will create value for
shareholders;
> observing those remuneration policies and practices;
> fairly and responsibly rewarding executives having regard to the performance of the Group, the performance of the
executives and industry remuneration conditions;
> the preparation of the Remuneration Report to be included in the Company's Annual Report;
> communicating the Company’s remuneration policy to shareholders, any proposed changes to that remuneration policy
and the Committee’s work on behalf of the Board; and
> oversight and monitoring of the implementation of the Company’s corporate governance systems and policies.
During the year ended 31 December 2021 the Remuneration, Nomination and Governance Committee comprised of Lisa
Bahash (Committee Chair), James Askew and John Beevers.
The Charter for the Remuneration, Nomination and Governance Committee is available on the Company’s website.
(B) DIRECTOR AND KEY MANAGEMENT PERSONNEL DETAILS
DIRECTORS
The following persons were directors of Syrah Resources Limited (“Syrah” or the “Company”) during the financial year ended
31 December 2021 and up to the date of this report, unless otherwise stated:
EXECUTIVE AND NON-EXECUTIVE DIRECTORS
NAME
James Askew
Shaun Verner
José Caldeira
Lisa Bahash
Sara Watts
John Beevers
POSITION
Non-Executive Chairman
Managing Director and Chief Executive Officer
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
KEY MANAGEMENT PERSONNEL
The following persons were the Key Management Personnel of Syrah during the year ended 31 December 2021 and up to the
date of this report, unless otherwise stated:
KEY MANAGEMENT PERSONNEL
NAME
Shaun Verner
Stephen Wells
Julio Costa
POSITION
Managing Director and Chief Executive Officer
Chief Financial Officer
Chief Operating Officer
24
SYRAH RESOURCES > ANNUAL REPORT 2021 (C) KEY REMUNERATION OUTCOMES AND UPDATES
(i)
What has changed in relation to remuneration during the year ended 31 December 2021
Non-Executive Director
Remuneration
> Non-Executive Directors received no fee increases during the year ended 31 December 2021
> Mr John Beevers received shareholder approval to participate in the Non-Executive Director
Share Rights Plan (“NEDSP”) at the Company’s Annual General Meeting held on 21 May
2021. The NEDSP was originally approved by shareholders at the Annual General Meeting
held on 22 May 2020. The NEDSP enables Non-Executive Directors to receive a portion of
their remuneration as Performance Rights and operates as follows:
(a) The NEDSP commenced on 1 February 2020, and was originally approved by
shareholders at the 22 May 2020 Annual General Meeting;
(b) Non-Executive Directors elect the proportion they would like paid in cash and paid in
share rights;
(c) The cash and share rights components will be settled at the end of each quarter (March,
June, September and December);
(d) The amount to be settled in share rights on a quarterly basis will be determined using a
30-day VWAP at the end of the quarter; and,
(e) The date of grant for the share rights will be the last day of each quarter for the relevant
financial year.
Executive Remuneration
> None of Syrah’s Key Management Personnel received a remuneration increase during the
year ended 31 December 2021
STI Outcomes
LTI Outcomes
Five Year Performance
and Retention Incentive
> The ‘at risk’ variable remuneration components (comprised of a Short-Term Incentive ("STI")
component and a Long-Term Incentive (“LTI”) component) continued to be 75% of Total Fixed
Remuneration (“TFR”) for the Managing Director and 50% of TFR for other executives in 2021
> The average STI outcome for the Managing Director and Chief Executive Officer and Key
Management Personnel was 97.8% of Target opportunity for the year ended 31 December
2021 based on the assessment of corporate and personal performance metrics. This
outcome reflects recognition of the contribution by the Managing Director and Chief Executive
Officer and Key Management Personnel towards the Company’s achievement of a number of
its performance targets during a challenging year, discussed in more detail in Table 4 below.
> For the Performance Rights awarded during the 2019 financial year and tested as at 31
December 2021, none vested. This reflects the Total Shareholder Return ("TSR") performance
of the Company during the three years to 31 December 2021 relative to the average TSR
performance of the comparator group.
In 2020, the Board of Directors implemented a Five Year Performance and Retention Incentive
(“5YPRI”) by way of a proposed one off issue of Performance Rights for selected senior
personnel, designed to take into account the operational review and restructure in late 2019,
including the restructure of the senior executive team. The program is also designed to align
with the maturity date of the Convertible Notes and to ensure that selected personnel are
remunerated in a manner which encourages high performance and is aligned with driving growth
in Shareholder value.
A summary of the Five Year Performance and Retention Incentive is outlined below:
(a) The 5YPRI are performance based, incentivising performance each year for selected senior
personnel;
(b) The Performance Rights have a term of 5 years;
(c) At the performance assessment date (occurring annually), the Board will determine the amount
of Performance Rights to vest based on agreed Key Performance Indicators (“KPIs”) set at
the beginning of each financial year, with the applicant being issued with a vesting notice
confirming any vested Rights following the assessment process. The performance assessment
will generally take place around February of each year, in respect of the KPIs for the year just
passed;
(d) The Performance Rights can be exercised from the vesting date for a two-year period;
(e) Each participant must be employed for the full calendar year applicable to the assessment of
the award (the Performance Rights do not partially vest for the year in the event of termination
of employment unless otherwise determined by the Board).
25
Five Year Performance
and Retention Incentive
continued
The general KPIs are structured as follows:
(a) For the first 2 years, the KPIs will be based on operating performance – cash position, sales,
production, and Vidalia Initial Expansion project milestones;
(b) For the following 3 years, the KPIs will be based on overall relative corporate performance to be
defined and approved by the Board on an annual basis, concurrent with Board approval of the
annual budget.
In March 2021 the Remuneration, Nomination and Governance Committee assessed the Year 1
5YPRI eligible to vest, and in February 2022 assessed the Year 2 5YPRI eligible to vest. The below
table summarises the outcomes from the Remuneration, Nomination and Governance Committee:
KMP’S/OTHER
PARTICIPANTS
NUMBER OF 5YPRI
PERFORMANCE
RIGHTS GRANTED
YEAR 1 5YPRI
PERFORMANCE
RIGHTS (VESTED)
YEAR 1 5YPRI
PERFORMANCE
RIGHTS (LAPSED)
YEAR 2 5YPRI
PERFORMANCE
RIGHTS (VESTED)
YEAR 2 5YPRI
PERFORMANCE
RIGHTS (LAPSED)
S Verner
J Costa
S Wells
Other
management
personnel
4,000,000
3,250,000
2,500,000
644,000
523,250
402,500
2,250,000
362,250
12,000,000
1,932,000
156,000
126,750
97,500
87,750
468,000
800,000
650,000
500,000
-
-
-
361,541
2,311,541
1,642,500
1,642,500
(ii) What changes are planned or approved for remuneration for the year commencing 1 January 2022
LTI Performance Hurdles The Board of Directors has resolved to adopt the same performance hurdles for the 2022 LTI
Program as were used in 2021, based on 2 measures:
(a) 50% will be based on the TSR performance of the Company over the relevant vesting period
relative to companies in the S&P/ASX300 Index (ASX:XKO) as at 1 January 2022, classified
under the “Materials” (previously “Metals & Mining") industry under the GICS classification
system; and
(b) 50% will be based on the absolute shareholder return performance of the Company over
the relevant vesting period against threshold and maximum targets as set by the Board. For
the year commencing 1 January 2022, the Board of Directors has determined threshold TSR
performance to be 8.6% compound annualised growth rate ("CAGR") and maximum TSR
performance to be 18.8% CAGR.
Non-Executive Director
Remuneration
The Non-Executive Director Share Rights Plan (“NEDSP”) is intended to continue, as approved
at the 20 May 2020 Annual General Meeting. The NEDSP will enable Non-Executive Directors to
receive a portion of their remuneration as Performance Rights and is intended to operate as follows:
(a) The NEDSP commenced on 1 February 2020, and was originally approved by shareholders at
the 22 May 2020 Annual General Meeting;
(b) Non-Executive Directors will elect the proportion they would like paid in cash and paid in share
rights;
(c) The cash and share rights components will be settled at the end of each quarter (March, June,
September and December);
(d) The amount to be settled in share rights on a quarterly basis will be determined using a 30-day
VWAP at the end of the quarter; and,
(e) The date of grant for the share rights will be the last day of each quarter for the relevant
financial year.
26
SYRAH RESOURCES > ANNUAL REPORT 2021 (D) REMUNERATION STRATEGY AND PHILOSOPHY
NON-EXECUTIVE DIRECTOR REMUNERATION
The Board policy is to remunerate Non-Executive Directors at market rates commensurate with time, commitment and
responsibilities. The level and structure of the fees paid to Non-Executive Directors is based upon the need to attract and
retain Non-Executive Directors of suitable calibre, the demands of the role and prevailing market conditions. The Board
determines payments to Non-Executive Directors taking into account comparable roles, comparative market data and if
required the advice of independent remuneration consultants. The Company also has a Non-Executive Director Share Plan
("NEDSP") in place, that was approved by shareholders at the 2020 Annual General Meeting (refer to Section C for details of
the NEDSP).
EXECUTIVE REMUNERATION
The Board in consultation with the Remuneration, Nomination and Governance Committee reviews the Company’s executive
remuneration strategy annually to ensure that the executive remuneration framework remains appropriate and aligned to the
business needs.
The Board aims to ensure the Company’s remuneration practices are performance based and designed to:
> attract and retain talented and high performing executives;
> provide appropriate levels of ‘at risk’ pay to encourage, recognise and reward high performance;
> motivate executives to pursue the Group’s long-term growth and success;
> demonstrate a clear relationship between the Group’s overall performance and the performance of executives; and,
> align executive incentives with interests of shareholders and other key stakeholders.
REMUNERATION CONSULTANTS
The Company engages the services of independent and specialist remuneration consultants from time to time to benchmark
the remuneration of Directors and Key Management Personnel, and to assist the Company in ensuring that its remuneration
arrangements remain competitive. No remuneration consultants were engaged for the year ended 31 December 2021 or 31
December 2020.
EQUITY INCENTIVE PLAN RULES
The Company has an Equity Incentive Plan ("EIP") established and approved by shareholders at the Annual General
Meeting on 17 May 2018, and subsequently refreshed at the Annual General Meeting on 21 May 2021, which applies to
all shares, performance rights and options offered for grant from 17 May 2018 onwards. Under the EIP, the Company may
issue performance rights, options and shares to directors and employees of the Company (or a subsidiary). The grant of
performance rights, options and shares is subject to such conditions (if any) as determined by the Board of Directors.
Any performance rights, options and shares granted under the EIP may be subject to such vesting conditions (if any) as
determined by the Board of Directors.
LONG-TERM INCENTIVE PLAN RULES
The Company has a former Long-Term Incentive Plan (“LTIP”) in existence. The LTIP was established and approved by
shareholders at an Annual General Meeting held on 13 November 2015 and enables the Company, at the discretion of the
Board of Directors, to offer employees and directors a number of equity related interests, including options, performance
rights and shares. The LTIP is now effectively dormant, applying only to performance rights and options granted from 13
November 2015 up until 16 May 2018. No new performance rights, options or shares will be issued under this LTIP.
NON-EXECUTIVE DIRECTOR SHARE RIGHTS PLAN RULES
The Company also has a Non-Executive Director Share Plan ("NEDSP"), which was established and approved by shareholders
at the Annual General Meeting on 22 May 2020. The Company also sought and obtained approval from Shareholders
at the Annual General Meeting on 21 May 2021 for Mr John Beevers to participate in the NEDSP. The plan is intended to
support NEDs to develop a meaningful shareholding in the Company and as a means of aligning the interests of NEDs and
shareholders generally through the diversion of current and future cash remuneration to equity. In addition, it will assist the
company in implementing its cost reduction strategies and maintain its cash reserves.
The key element of the NEDSP for NEDs is that it provides the opportunity for NEDs to sacrifice part or all of their cash fees
in favour of Equity Securities under this plan to build their shareholding in the Company. The introduction of the NEDSP is
also intended to remunerate individual NEDs for any material additional efforts that individual NEDs are required to deliver in
progressing the Company’s goals.
The NEDSP does not attach any performance measures to vesting. This is in line with best practice governance standards
which recommend that non-executive directors generally should not receive equity with performance hurdles attached as it
may lead to bias in decision-making and compromise their objectivity and in turn their independence.
27
(E) REMUNERATION COMPONENTS
NON-EXECUTIVE DIRECTOR FEES
The fee structure for Non-Executive directors provides for Non-Executive Directors to receive a Board fee and additional fees
for chairing and participating on Board Committees. Except for the options set out in Section H of the Remuneration Report,
Non-Executive Directors do not receive performance-based pay or retirement allowances.
Non-executive Directors’ fees are determined within an aggregate Directors’ fee pool limit, which is periodically reviewed for
adequacy. Any increase to the aggregate Directors’ fee pool is submitted to shareholders for approval. There was no change
to the fee pool during the year ended 31 December 2021 and the maximum currently stands at A$1,000,000 per annum which
was approved by shareholders at an Annual General Meeting on 26 May 2016.
The annual Non-Executive Director fees (inclusive of superannuation contribution amounts where applicable) for being a
member of the Board and participating on its sub committees were as follows:
Table 1: Non-Executive Director Annual Fees
ANNUAL FEES
Board Fees
Sub-Committees
Chairperson
Members
Audit and Risk Committee
Chairperson
Members
Sustainability Committee
Chairperson
Remuneration, Nomination and
Governance Committee
Members
Chairperson
Members
2021(2)
2020
A$
160,000
95,000
20,000
10,000
15,000
10,000
15,000
US$(1)
120.223
71,383
15,028
7,514
11,271
7,514
11,271
A$
160,000
95,000
20,000
10,000
15,000
10,000
15,000
US$(1)
110,473
65,593
13,809
6,905
10,357
6,905
10,357
10,000
7,514
10,000
6,905
(1) Annual fees for Non-Executive Directors have been translated from Australian Dollars to US Dollars at the average exchange rate for the year ended
31 December 2021 of 0.7514 (2020: 0.6905).
(2) It is noted that during 2021, Australian based Non-Executive Directors received a superannuation adjustment (increase of 0.5% to 10% statutory
superannuation), effective from 1 July 2021, which had the effect of increasing their total remuneration package by 0.5% on top of the amounts
stated in the table above.
In addition to the above fees, Non-Executive Directors are entitled to receive a travel stipend of $3,757 (A$5,000) for each
international trip where the travel time is in excess of seven hours of international travel (2020: $3,452 (A$5,000)).
All Non-Executive Directors enter into a service agreement with the Company in the form of a letter of appointment. The letter
of appointment summarises the Board policies and terms, including remuneration, relevant to the office of director of the
Company.
To align the Non-Executive Directors’ interests with shareholder interests, Non-Executive Directors are eligible to participate in
the Company’s Equity Incentive Plan (as approved by shareholders), however such participation has been limited to a one- off
grant of performance rights at or around the time of appointment as a Director, as set out in Section H of this Remuneration
Report. Amounts expensed through the Company's profit and loss statement for performance rights issued to Non-Executive
Directors are not included in the calculation of Non-Executive Directors fees for the purposes of determining the aggregate
Directors' fee pool amount.
28
SYRAH RESOURCES > ANNUAL REPORT 2021
EXECUTIVE REMUNERATION
The Company’s remuneration policy for executives incorporates a Total Fixed Remuneration (“TFR”) component (base salary
plus statutory superannuation) and ‘at risk’ performance components; being a Short-Term Incentive (“STI”) component and a
Long-Term Incentive (“LTI”) component. The STI payments made in 2021 were 50% paid in the Company’s fully paid ordinary
shares (“Shares”) (2020: between 0% and 50% in shares). These components for the year ended
31 December 2021 are summarised below:
Table 2: Remuneration Components
ELEMENT
Total Fixed
Remuneration
DELIVERY
100% Cash
Short-Term
Incentive
Cash and/or
Shares
Long-Term
Incentive
100%
Performance
Rights or
other equity
instruments
PURPOSE
To attract high calibre executives
by offering competitive market
salary including superannuation
and non-monetary benefits
Reward for annual performance
based on the Performance
Metrics. 50% awarded in shares
to encourage executives to hold
shares in the Company and 50%
is awarded in cash
Alignment to long-term
shareholder value. Award given in
shares to encourage executives to
hold shares in the Company
PERFORMANCE METRICS
Nil
POTENTIAL VALUE (1)
Positioned between the
25th and 50th percentile
of a comparative group
of companies
Combination of corporate and
personal performance measures
weighted 50:50
Managing Director
75% of TFR
Other executives
50% of TFR
Managing Director
75% of TFR
Other executives
50% of TFR
3 year Company TSR
performance with 50% relative
to the nominated Comparator
Group and 50% relative to the
nominated Absolute Measure
Performance Metrics.
(1) The Board of Directors reserves the discretion to reward exceptional achievement for stretch performance on any particular performance measure.
The following table sets out the relative mix of fixed remuneration and the total opportunity for performance related
remuneration for Managing Director and Key Management Personnel for the current financial period:
Table 3: Remuneration Components
NAME
Executive Directors
S Verner
Key Management Personnel
S Wells
J Costa
J Currie(1)
J Morrissey(2)
TOTAL FIXED
REMUNERATION
AT RISK REMUNERATION
STI
LTI
DEC-21
DEC-20
DEC-21
DEC-20
DEC-21
DEC-20
40%
50%
50%
-
-
40%
50%
50%
50%
50%
30%
30%
30%
25%
25%
-
-
25%
25%
25%
25%
25%
25%
-
-
30%
25%
25%
25%
25%
(1) J Currie ceased employment with the Company as Chief Legal Officer on 28 January 2020.
(2) J Morrissey ceased employment with the Company on 31 March 2020.
TOTAL FIXED REMUNERATION
The Remuneration, Nomination and Governance Committee reviews and determines the fixed remuneration, inclusive of
superannuation contribution amounts and salary sacrifice arrangements, for Executive Directors and Key Management
Personnel with oversight from the Board of Directors. The process consists of a review of Group and individual performance,
relevant comparative remuneration and, where appropriate, external advice from remuneration consultants. The Total Fixed
Remuneration for current Key Management Personnel is currently positioned between the 25th and 50th percentile of a
comparative group of companies (based on remuneration benchmarking in February 2022).
Total Fixed Remuneration for Key Management Personnel for financial year ended 31 December 2021 is set out in Section F.
29
‘AT RISK’ PERFORMANCE BASED REMUNERATION
Short Term Incentive
The objective of the STI Program is to align reward of Executives with the attainment of Key Performance Indicators (“KPIs”)
which drive short to medium term outcomes for the business incorporating a mixture of business development, operational
and investor relations performance indicators. Corporate and personal performance measures are set and agreed annually by
the Remuneration, Nomination and Governance Committee with oversight from the Board of Directors.
(i)
Short Term Incentive Program – 31 December 2021
Table 4: STI Program (31 December 2021)
FEATURE
Target
Opportunity
DESCRIPTION
Managing Director – 75% of Total Fixed Remuneration ("TFR") for target performance.
Other Executives – 50% of Total Fixed Remuneration for target performance.
Group
Performance
Metrics & Award
Outcome
The Board of Directors reserves the discretion to reward exceptional achievement for stretch performance
on any particular performance measure.
The STI metrics will be made up of a combination of corporate (50%) and personal performance measures
(50%). The table below summarises the corporate performance metrics for the year ending 31 December
2021:
METRIC
WEIGHTING REASON FOR SELECTION
Corporate Performance
measures:
Sustainability (HSSEC)/Compliance
& Governance
Balama Production & Cost
Vidalia Initial Expansion Project
Marketing
Strategic
Corporate measures are aligned with the strategic
priorities for the Group
Promoting a strong culture of safe practices, social
licence to operate, and good corporate governance
and compliance in all activities
Delivery against production and operating cost
targets
Delivery of key strategic project milestones
Technical sales & marketing program to drive product
and price differentiation for both Balama and Vidalia
10%
10%
16%
9%
5%
Development of long-term strategic growth options
Total corporate performance
measures
Personal performance metrics
Total
50%
50%
100%
Targeted metrics relevant to individual roles
The Board assessed an overall attainment of 44% out of 50% for the corporate performance metrics for the
year ended 31 December 2021. This was based on recognition of the Company’s achievement of a number of
its performance targets during a challenging year. Some of these achievements include maintaining a strong
ESG position, the safe restart of production at Balama and the execution of pivotal milestones in Syrah’s
downstream strategy development to become a large scale vertically integrated natural graphite AAM supplier,
which is underpinned by an offtake agreement secured with Tesla, Inc in December 2021.
Determination of
Outcomes
Delivery of STI
The STI outcomes were determined by the Remuneration, Nomination and Governance Committee, with
oversight from the Board of Directors in February 2022.
50% of the STI for the year ending 31 December 2021 was paid in shares, issued under the Company’s
Equity Incentive Plan.
30
SYRAH RESOURCES > ANNUAL REPORT 2021
The following table shows details of the STI opportunity, as a percentage of TFR, for each of the Key Management Personnel
and the amounts granted for the year ended 31 December 2021.
Table 5: STI Opportunity (31 December 2021)
NAME
Executive Director
S Verner
Key Management Personnel
S Wells
J Costa
TARGET OPPORTUNITY
% OFFER
AMOUNT$(1)
AMOUNT
GRANTED
%
AMOUNT
FORFEITED
%
75%
$278,957
85.5%
14.5%
50%
50%
$154,976
$165,308
104%
104%
0%
0%
(1) Amounts translated from Australian Dollars to US Dollars using an average exchange rate for the year ended 31 December 2021 of 0.7514.
(ii)
Short Term Incentive Program – 31 December 2022
Table 6: STI Program (31 December 2022)
FEATURE
Target
Opportunity
DESCRIPTION
Managing Director – 75% of Total Fixed Remuneration ("TFR") for target performance.
Other executives – 50% of Total Fixed Remuneration ("TFR") for target performance.
The Board of Directors reserves the discretion to reward exceptional achievement for stretch performance
on any particular performance measure.
The STI metrics will be made up of a combination of corporate (50%) and personal performance measures
(50%). The table below summarises the corporate performance metrics for the year ending 31 December 2022:
METRIC
WEIGHTING REASON FOR SELECTION
Group
Performance
Metrics & Award
Outcome
Corporate performance
measures:
Sustainability (HSSEC) Compliance
& Governance
Balama Production & Cost
Vidalia Initial Expansion Project
Marketing
Strategic
Total corporate performance
measures
Personal performance metrics
Total
9%
14%
20%
4%
3%
50%
50%
100%
Corporate measures are aligned with the strategic
priorities for the Group
Promoting a values based culture of safe work
practices, strong community and stakeholder
relations, environmental responsibility and good
corporate governance
Delivery against production and operating cost
targets
Delivery of key strategic project milestones
Technical sales & marketing program to drive product
and price differentiation for both Balama and Vidalia
Development of long term strategic growth
opportunities
Targeted metrics relevant to individual roles
Determination of
Outcomes
Delivery of STI
The STI outcomes will be determined by the Remuneration, Nomination and Governance Committee, with
oversight from the Board of Directors.
The delivery of the STI for the year ending 31 December 2022 will be determined by the Remuneration,
Nomination and Governance Committee, with oversight from the Board of Directors.
31
Five Year Performance and Retention Incentive ("5YPRI")
In addition to the LTI Program described below, the Board of Directors will continue to utilize the Five Year Performance and
Retention Incentive for selected senior personnel (see Section C above for details).
Long-Term Incentive
The LTI Program is part of the Company’s remuneration strategy and is designed to align the interests of management and
shareholders (Total Shareholder Return measurement) and assist the Company to attract, motivate and retain executives. In
particular, the LTI Program is designed to provide relevant directors and key employees with an incentive to remain with Syrah
and contribute to the future performance of the Group over the long term.
Performance Rights
Executives and senior managers within the Group are granted performance rights on an annual basis and vesting will be
contingent on the achievement of specific performance hurdles over a three-year period. These performance rights are issued
under the Equity Incentive Plan (from 17 May 2018, with the EIP refreshed on 21 May 2021) or the LTIP (prior to 17 May 2018).
The potential maximum value of the annual grant of performance rights over a three year period represents between 20%
and 75% of an eligible employee’s total fixed remuneration. The actual number of performance rights granted is calculated
based on the closing volume weighted average price (“VWAP”) of the Company’s shares on the ASX for the 60 trading days
preceding the commencement of the performance period, being 1 January.
Performance Hurdles
The performance hurdles for 2022 are based on the Company’s TSR performance:
(a) 50% will be based on the TSR performance of the Company over the relevant vesting period relative to companies in
the S&P/ASX300 Index (ASX:XKO) as at 1 January 2022, classified under the “Materials” (formally the “Metals & Mining”)
industry under the GICS classification system; and
(b) 50% will be based on the absolute shareholder return performance of the Company over the relevant vesting period
against threshold and maximum targets as set by the Board. For the 2018, 2019, 2020, 2021 and 2022 years, the Board
of Directors has determined threshold TSR performance to be 8.6% compound annualised growth rate ("CAGR") and
maximum TSR performance to be 18.8% CAGR. These targets have been based upon the median performance of the
S&P/ASX300 Index over a 20-year period.
Vesting Conditions
Vesting of performance rights will be subject to the relevant performance hurdles referred to above, which will be tested
over a three year vesting period. If the performance hurdles are not satisfied (or become incapable of being satisfied), the
performance rights will lapse (unless the Board of Directors determines otherwise).
The number of performance rights that vest will be determined by assessing the performance of the Company, measured
by the relevant performance measure as at the date that is three years after the commencement of the performance period
(“Performance Date”), relative to the relevant performance hurdle(s) (the “TSR Hurdle(s)”).
The following table provides a summary of the TSR Hurdle(s) and the relationship between Company performance and the
percentage vesting of performance rights:
PERFORMANCE AGAINST TSR
COMPARATOR GROUP (50% OF
PERFORMANCE RIGHTS)
TSR performance is at or below the
median performance of the comparator
group
PERFORMANCE AGAINST
ABSOLUTE TSR MEASURE
(50% OF PERFORMANCE RIGHTS)
TSR performance is at or below threshold
performance (8.6% CAGR)
PERCENTAGE OF PERFORMANCE
RIGHTS ELIGIBLE TO VEST
0%
TSR performance of between the median
and 75th percentile performance of the
comparator group
TSR performance is between threshold
(8.6% CAGR) and maximum performance
(18.8% CAGR)
Straight line pro-rata between 50% and
100%
TSR performance is at or above the
75th percentile performance of the
comparator group
TSR performance is above maximum
performance (18.8% CAGR)
100%
32
SYRAH RESOURCES > ANNUAL REPORT 2021 In the event that a participant in the LTI Program ceases to be a director or employee of the Group, the treatment of any
performance rights held by the participant will depend on the circumstances surrounding the cessation of his/her directorship/
employment. In general terms, and subject to the discretion of the Plan Committee/Board, if the participant is a “bad leaver”
(for reasons such as resignation, dismissal for poor performance or as otherwise determined by the Remuneration, Nomination
and Governance Committee/Board), any unvested performance rights will immediately lapse; whereas if the participant is not
a “bad leaver”, he/she will be entitled to retain a pro-rata amount of unvested performance rights (based on the proportion of
the vesting period that the participant was a director/employee).
The Board also has power to deem that performance rights will lapse or be deemed to be forfeited in a number of scenarios,
including if a participant commits an act of fraud, defalcation or gross misconduct, or materially breaches his or her duties,
brings the Group (or any member thereof) into disrepute or if the Board determines there has been a material misstatement or
omission in the financial statements.
In the event of a change of control, all unvested performance rights will vest (in the case of performance rights granted up until
16 May 2018) or (in the case of performance rights granted from 17 May 2018 onwards) will vest unless the Board of Directors
exercises its discretion to determine otherwise.
TSR Comparator Groups
Performance rights will be tested against Syrah’s TSR performance relative to the comparative group on the Performance Date.
Year ended 31 December 2019 Grant
i.
The TSR comparator group as selected by the Board of Directors for performance rights for the year ending 31 December
2021 comprise of the companies in the S&P/ASX300 Index (ASX:XKO) as at 1 January 2019, classified under the “Materials”
(formally “Metals & Mining”) industry under the GICS classification system as follows:
Adelaide Brighton Limited
Iluka Resources Limited
Orica Limited
Altura Mining Limited
Alumina Limited
Amcor Limited
IMDEX Limited
Ioneer Limited
OZ Minerals Limited
Pact Group Holdings Limited
Incitec Pivot Limited
Pilbara Minerals Limited
Aurelia Metals Limited
James Hardie Industries Plc
Perseus Mining Limited
Ausdrill Limited
BHP Group Limited
Jupiter Mines Limited
Rio Tinto Limited
Kidman Resources Limited
Regis Resources Limited
BlueScope Steel Limited
Lynas Corporation Limited
Resolute Mining Limited
Boral Limited
Brickworks Limited
CSR Limited
Dacian Gold Limited
DuluxGroup Limited
Evolution Mining Limited
Fletcher Building Limited
Mineral Resources Limited
South32 Limited
MACA Limited
Metals X Limited
Newcrest Mining
Saracen Mineral Holdings Limited
St Barbara Limited
Sandfire Resources NL
New Century Resources Limited
Sims Metal Management Limited
Northern Star Resources Limited
Wagners Holding Company Limited
Nufarm Limited
Westgold Resources Limited
Fortescue Metals Group Limited
OceanaGold Corporation
Western Areas Limited
Gold Road Resources Limited
Om Holdings Limited
Galaxy Resources Limited
Independence Group NL
Orora Limited
Orocobre Limited
The Board reserves the right to adjust the composition and number of the companies in the TSR Comparator Group (2019
Grant) from time to time to take into account events including, but not limited to, takeovers, mergers and liquidations that might
occur during the performance period.
33
Outcome for 31 December 2019 Grant
None of the performance rights granted for the 2019 financial year and tested as at 31 December 2021 vested, as the TSR
performance of Syrah was below the median relative TSR performance of the comparator group, and below the threshold of
the absolute TSR measure over the Performance Period.
Year ended 31 December 2020 Grant
ii.
The TSR comparator group as selected by the Board of Directors for performance rights for the year ending 31 December
2022 comprise of the companies in the S&P/ASX300 Index (ASX:XKO) as at 1 January 2020, classified under the “Materials”
(formally “Metals & Mining”) industry under the GICS classification system as follows:
Adelaide Brighton Limited
Alacer Gold Corp
Alumina Limited
Amcor Plc Cdi
Aurelia Metals Limited
Bellevue Gold Limited
BHP Group Limited
IMDEX Limited
Ioneer Limited
Incitec Pivot Limited
James Hardie Indust
Jupiter Mines Limited
Pact Group Holdings Limited
Pilbara Minerals Limited
Perenti Global Limited
Perseus Mining Limited
Rio Tinto Limited
Lynas Corporation Limited
Ramelius Resources
Macmahon Holdings Limited
Regis Resources Limited
Bluescope Steel Limited
Mount Gibson Iron Limited
Resolute Mining Limited
Boral Limited
Brickworks Limited
Mineral Resources Limited
South32 Limited
MACA Limited
Saracen Mineral Holdings Limited
Champion Iron Limited
Newcrest Mining Limited
St Barbara Limited
CSR Limited
Dacian Gold Limited
New Century Resources Limited
Sandfire Resources NL
Nickel Mines Limited
Sims Limited
Evolution Mining Limited
Northern Star Resources Limited
Silver Lake Resources Limited
Fletcher Building Foreign Exempt NZX
Nufarm Limited
Fortescue Metals Group Limited
Oceanagold Corp
West African Resources Limited
Westgold Resources Limited
Gold Road Resources Limited
Orora Limited
Western Areas Limited
Galaxy Resources
IGO Limited
Iluka Resources
Orocobre Limited
Orica Limited
OZ Minerals Limited
34
SYRAH RESOURCES > ANNUAL REPORT 2021 Year ended 31 December 2021 Grant
iii.
The TSR comparator group as selected by the Board of Directors for performance rights for the year ending 31 December
2023 comprise of the companies in the S&P/ASX300 Index (ASX:XKO) as at 1 January 2021, classified under the “Materials”
(formally “Metals & Mining”) industry under the GICS classification system as follows:
ADBRI Limited
Gold Road Resources Limited
OZ Minerals Limited
Alkane Resources Limited
IGO Limited
Pact Group Holdings Limited
Alumina Limited
Amcor Plc Cdi
Aurelia Metals Limited
Bellevue Gold Limited
BHP Group Limited
Iluka Resources Limited
IMDEX Limited
Incitec Pivot Limited
Ioneer Limited
Perenti Global Limited
Perseus Mining Limited
Pilbara Minerals Limited
Ramelius Resources Limited
James Hardie Industries Plc
Red 5 Limited
Bluescope Steel Limited
Jupiter Mines Limited
Regis Resources Limited
Boral Limited
Brickworks Limited
Capricorn Metals Ltd
Champion Iron Limited
CSR Limited
Dacian Gold Limited
De Grey Mining Limited
Deterra Royalties Ltd
Evolution Mining Limited
Fletcher Building Limited
Lynas Rare Earths Limited
Resolute Mining Limited
MACA Limited
Rio Tinto Limited
Macmahon Holdings Limited
Sandfire Resources Limited
Mineral Resources Limited
Silver Lake Resources Limited
Mount Gibson Iron Limited
Newcrest Mining Limited
Nickel Mines Limited
Sims Limited
South32 Limited
SSR Mining
Northern Star Resources Limited
St Barbara Limited
Nufarm Limited
Orica Limited
West African Resources Limited
Western Areas Limited
Westgold Resources Limited
Fortescue Metals Group Limited
Orocobre Limited
Galaxy Resources Limited
Orora Limited
Year ended 31 December 2022 Grant
iv.
The TSR comparator group as selected by the Board of Directors for performance rights for the year ending 31 December
2024 comprise of the companies in the S&P/ASX300 Index (ASX:XKO) as at 1 January 2022, classified under the “Materials”
(formally “Metals & Mining”) industry under the GICS classification system as follows:
ADBRI Limited
Allkem Limited
Alumina Limited
Amcor Plc Cdi
Gold Road Resources Ltd
Perseus Mining Limited
IGO Limited
Iluka Resources Limited
Imdex Ltd
Piedmont Lithium Inc Cdi
Pilbara Minerals Limited
Ramelius Resources Limited
Aurelia Metals Limited
Incitec Pivot Limited
Red 5 Limited
Australian Strategic Materials Ltd
Ioneer Limited
Regis Resources Limited
Bellevue Gold Limited
BHP Group Ltd
James Hardie Industries Plc
Resolute Mining Limited
Liontown Resources Limited
Rio Tinto Limited
Bluescope Steel Limited
Lynas Rare Earths Limited
Sandfire Resources Limited
Boral Limited
Brickworks Limited
Capricorn Metals Ltd
Chalice Mining Limited
Champion Iron Ltd
Mineral Resources Limited
Silver Lake Resources Limited
Mount Gibson Iron Limited
Newcrest Mining Limited
Sims Ltd
South32 Ltd
Nickel Mines Ltd
SSR Mining Inc Cdi
Northern Star Resources Ltd
St Barbara Ltd
Coronado Global Resources Inc. Cdi
Nufarm Limited
CSR Limited
De Grey Mining Ltd
Deterra Royalties Ltd
Orica Limited
Orora Ltd
OZ Minerals Limited
Evolution Mining Limited
Pact Group Holdings Ltd
Fortescue Metals Group Ltd
Perenti Global Limited
Vulcan Energy Resources Ltd
West African Resources Ltd
Western Areas Limited
Westgold Resources Ltd
35
If at any time during the Vesting Period a company in the Comparator Group suffers an insolvency event, undertakes material
merger or acquisition activity or is delisted from the ASX it will cease to become part of the Comparator Group.
The table below summarises the number and movements in Performance Rights issued under the Equity Incentive Plan during
the year:
Table 7: Equity Incentive Plan Performance Rights
Movement for the year ended 31 December 2021:
Balance at the beginning of the year
Granted during the year
Exercised during the period
Lapsed during the year
Forfeited during the year
Balance at the end of the year
At 31 December 2021:
Vested
Unvested
Total
2021
NUMBER
2020
NUMBER
17,369,660
1,513,470
3,410,166
16,060,139(3)
(1,140,928)
-
(1,631,621)
(191,709)
-
(12,240)
18,007,277(1)
17,369,660(2)
1,391,266
-
16,616,011
17,369,660
18,007,277
17,369,660
(1) 774,686 of these performance rights related to the 2019 LTI lapsed in 2022 as the performance criteria were not met. In addition to this, 2,311,541
5YPRI Performance Rights vested (KMP and others outside of KMP) following assessment at the end of the 31 December 2021 Year 2 performance
period in 2022 and the balance of 67,500 Year 2 5YPRI Performance Rights lapsed in 2022 as the performance criteria were not met. In addition, a
total of 200,000 Performance Rights relating to Retention & Performance Incentives also vested subsequent to 31 December 2021.
(2) Included in the prior year column is an amount of 32,485 performance rights relating to the 2018 LTI lapsed in 2021 as the performance criteria
were not met. In addition to this, 1,932,000 5YPRI Performance Rights vested (KMP and others outside of KMP) following assessment at the end
of the 31 December 2020 Year 1 performance period in 2021 and the balance of 468,000 Year 1 5YPRI Performance Rights lapsed in 2021 as the
performance criteria were not met. In addition, a total of 600,194 Performance Rights relating to Retention & Performance Incentives also vested
subsequent to 31 December 2020.
(3) Included in the prior year column is an amount granted during 2020 relating to 12,000,000 5YPRI Performance Rights issued during FY20.
The Board of Directors has resolved to grant Performance Rights to S Verner as his LTI in respect of the period commencing
on 1 January 2022, subject to shareholder approval, and 345,513 performance rights to other Key Management Personnel in
respect of the period commencing on 1 January 2022. The Board of Directors also resolved to grant 821,750 performance
rights to other executives and senior managers in respect of the period commencing on 1 January 2022 in accordance with
the relevant employment contracts. These performance rights were issued on 10 March 2022 and are not included in the
above table. See also Section C for details of the 5YPRI.
36
SYRAH RESOURCES > ANNUAL REPORT 2021 The table below summarises the number and movements in Performance Rights issued under the Non-Executive Director
Share Rights during the year:
Table 8: Non-Executive Director Share Rights
Movement for the year ended 31 December 2021:
Balance at the beginning of the year
Granted during the year
Lapsed during the year
Forfeited during the year
Exercised during the year
Balance at the end of the year
At 31 December 2021:
Vested
Unvested
Total
2021
NUMBER
2020
NUMBER
188,324
-
-
-
-
-
188,324
-
-
-
188,324(1)
188,324(2)
188,324
-
188,324
-
188,324
188,324
(1) NED Rights in relation to the June 2020, September 2020, December 2020, March 2021, June 2021, September 2021 and December 2021 quarters
were issued subsequent to 31 December 2021, on 18 March 2022.
(2) During the prior year, the Company received shareholder approval of a Non-Executive Director Share Plan, which is a salary sacrifice plan pursuant
to which NED’s may elect to sacrifice up to 100% of their annual NED’s fees to acquire Non-Executive Director Share Rights (NED Rights). The
Company issued a total of 188,324 NED Rights in relation to the March 2020 quarter, specifically for the months of February 2020 and March
2020 during the year. These securities were issued under ASX Listing Rule 10.14. NED Rights in relation to the June 2020, September 2020, and
December 2020 quarters were yet to be issued as at 31 December 2020.
The table below summarises the number and movements in performance rights issued under the LTIP during the year:
Table 9: LTIP Performance Rights
Movement for the year ended 31 December 2021:
Balance at the beginning of the year
Granted during the year
Lapsed during the year
Forfeited during the year
Exercised during the year
Balance at the end of the year
At 31 December 2021:
Vested
Unvested
Total
(1) 189,962 of these rights lapsed in 2021 as the performance criteria were not met.
2021
NUMBER
2020
NUMBER
189,962
513,504
-
-
(189,962)
(285,256)
-
-
-
-
-
-
(38,286)
-
189,962(1)
-
189,962
189,962
37
Former Long Term Incentive Plan ("LTIP")
As at 31 December 2021, there were no options outstanding (31 December 2020: Nil) under the LTIP. The table below
summarises the number and movements in options under this plan during the year:
Table 10: LTIP Options
Movement for the year ended 31 December 2021:
Balance at the beginning of the year
Granted during the year
Forfeited during the year
Expired during the year
Balance at the end of the year
At 31 December 2021:
Vested
Unvested
TOTAL
2021
NUMBER
2020
NUMBER
-
-
-
-
-
-
-
-
1,000,000
-
-
(1,000,000)
-
-
-
-
In the event that a participant in the LTIP ceases to be a director or employee of the Group, the treatment of any options held
by the participant will depend on the circumstances surrounding the cessation of his/her directorship/employment.
In general terms, and subject to the discretion of the Plan Committee, if the participant is a “bad leaver”, any unvested options
will immediately lapse; whereas if the participant is not a “bad leaver”, he/she will be entitled to retain a pro-rata amount of
unvested options (based on the proportion of the vesting period that the participant was a director/employee).
The Plan Committee also has power to deem that options will lapse or be forfeited in a number of scenarios, including if
a participant commits an act of fraud, defalcation or gross misconduct, or materially breaches his or her duties or brings
the Syrah Group (or any member thereof) into disrepute or if the Plan Committee determines there has been a material
misstatement or omission in the financial statements which affects those options.
In the event of a change of control, all unvested options will vest.
Current Equity Incentive Plan
As at 31 December 2021, there were 600,000 options outstanding under this plan (31 December 2020: 1,600,000). The table
below summarises the number and movements in Options under this plan during the year:
Table 11: Equity Incentive Plan Options
Movement for the year ended 31 December 2021:
Balance at the beginning of the year
Granted during the year
Forfeited during the year
Expired during the year
Balance at the end of the year
At 31 December 2021:
Vested
Unvested
TOTAL
2021
NUMBER
2020
NUMBER
1,600,000
1,600,000
-
-
(1,000,000)
-
-
-
600,000
1,600,000
600,000
1,600,000
-
-
600,000
1,600,000
In the event that a participant in the Equity Incentive Plan ceases to be an employee of the Group, the treatment of any options
held by the participant will depend on the circumstances surrounding the cessation of his/her employment. In general terms,
and subject to the discretion of the Board of Directors, if the participant is a “bad leaver” (for example resigns or ceases
employment due to poor performance), any unvested options will immediately lapse and any vested options must be exercised
38
SYRAH RESOURCES > ANNUAL REPORT 2021
within 60 days of ceasing employment after which time the vested options lapse; whereas if the participant is not a “bad
leaver”, he/she will be entitled to retain a pro-rata amount of unvested options (based on the proportion of the vesting period
that has elapsed).
In the case of a director who participates in the Equity Incentive Plan and subject to the discretion of the Board of Directors,
if a director ceases to hold office as a director of the Company all unvested options will lapse and all vested but exercised
options will remain on foot and will be exercisable until the last exercise date (after which time they will lapse).
The Board of Directors also has power to deem that options will lapse or be forfeited in a number of scenarios, including if
a participant commits an act of fraud, defalcation or gross misconduct, or materially breaches his or her duties or brings the
Group (or any member thereof) into disrepute or if the Board determines there has been a material misstatement or omission
in the financial statements that the Board of Directors considers may require a re-statement of the Group’s financial accounts.
In the event of a change of control, all unvested options will vest unless the Board determines otherwise.
(F) DETAILS OF REMUNERATION EXPENSES
The following tables show details of the remuneration expense recognised for the Group’s Non-Executive Directors, Executive
Directors and other Key Management Personnel for the current and previous financial periods measured in accordance with
the requirements of the accounting standards:
Table 12: Remuneration for the financial year ended 31 December 2021
FIXED REMUNERATION
CASH
VARIABLE REMUNERATION
SALARY
& FEES(1) LEAVE(2)
SUPER-
ANNUA-
TION
TERM-
INATION
BENEFITS
NON-
MONETARY
BENEFITS
SHARE
RIGHTS(3)
STI
CASH(4)
STI
SHARES(4)
LTI
RIGHTS(5) OPTIONS(5)
TOTAL
PERFORM-
ANCE
RELATED
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
%
NON-EXECUTIVE DIRECTORS
J Askew(6)
-
J Caldeira
43,205
L Bahash
S Watts
45,084
75,626
J Beevers
69,107
Sub-total
233,022
EXECUTIVE DIRECTOR
-
-
-
-
-
-
-
-
-
7,694
2,705
10,399
S Verner(7)
351,374
19,083
19,724
Sub-total
351,374
19,083
19,724
KEY MANAGEMENT PERSONNEL
J Costa
310,139
10,903
19,724
S Wells
281,774
10,221
27,473
Sub-total
591,913
21,124
47,197
TOTAL(8)
1,176,309
40,207
77,320
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
139,008
43,205
45,084
3,288
14,796
245,381
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,257
37,525
44,782
9,154
9,154
-
-
-
-
-
-
-
-
119,254
119,254
351,519
119,254
119,254
351,519
85,960
85,960
268,473
80,587
80,587
181,199
166,547
166,547
449,672
9,154
245,381
285,801
285,801
845,973
-
-
-
-
-
-
-
-
-
-
139,008
86,410
90,168
93,865
124,133
533,584
-
-
-
-
-
-
989,362
60%
989,362
-
781,159
661,841
- 1,443,000
- 2,965,946
56%
52%
-
-
(1) All amounts translated from Australian Dollars to United States Dollars at an average exchange for the year ended 31 December 2021 of 0.7514.
(2) Represents annual leave and long service leave entitlements, being the movement in the entitlements measured on an accrual basis during the
financial period.
(3) Non-Executive Director Share Plan, which is a salary sacrifice plan pursuant to which NED’s may elect to sacrifice up to 100% of their annual NED’s
fees to acquire Non-Executive Director Share Rights (NED Rights). The NED Rights in relation to the June 2020, September 2020, December 2020,
March 2021, June 2021, September 2021 and December 2021 quarters were issued subsequent to 31 December 2021, on 18 March 2022.
(4) Represents STI payments made in shares on 10 March 2022, and cash on 15 March 2022, in respect of performance for the year ended 31
December 2021 as approved by the Remuneration, Nomination and Governance Committee.
(5) Represents amounts expensed through the Company’s profit and loss for performance rights and options issued under the Company’s EIP. These
amounts are recognised in the Company’s profit and loss over the vesting period in accordance with AASB 2 Share-based Payments.
(6) Director’s fees paid to J Askew are paid to International Mining and Finance Corp, a company of which he is a Director.
(7) The Board of Directors has resolved to grant EIP performance rights to S Verner and 345,513 performance rights to other Key Management
Personnel in respect of the period commencing on 1 January 2022. The performance rights to S Verner remain subject to shareholder approval.
(8) Non-Executive Directors are entitled to receive a travel stipend of $3,757 (A$5,000) for each international trip where the travel time is in excess of
seven hours of international travel.
39
Table 13: Remuneration for the financial year ended 31 December 2020
FIXED REMUNERATION
VARIABLE REMUNERATION
CASH
SALARY
& FEES(1) LEAVE(2)
SUPER-
ANNUA-
TION
TERM-
INATION
BENEFITS
NON-
MONETARY
BENEFITS
SHARE
RIGHTS(3)
STI
CASH(4)
STI
SHARES(4)
LTI
RIGHTS(5) OPTIONS(5)
TOTAL
PERFORM-
ANCE
RELATED
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
%
NON-EXECUTIVE DIRECTORS
J Askew(6)
J Caldeira
L Bahash
S Watts
J Beevers(7)
S Riggall(8)
10,645
46,462
48,332
68,284
46,759
28,639
Sub-total
249,121
EXECUTIVE DIRECTOR
-
-
-
-
-
-
-
-
-
-
6,889
1,450
2,870
11,209
S Verner(9)
322,966
20,042
17,261
Sub-total
322,966
20,042
17,261
KEY MANAGEMENT PERSONNEL
J Costa
S Wells
280,668
12,246
21,748
258,921
11,481
24,597
-
-
-
-
-
-
-
-
-
-
-
J Morrissey(10)
51,784
2,363
10,704
97,895
J Currie(11)
15,931
643
6,433
144,730
607,304
26,733
63,482
242,625
Sub-total
TOTAL(12)
-
-
-
-
-
-
-
117,090
36,393
37,975
4,230
-
-
195,688
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,541
-
-
10,541
9,176
9,176
-
-
-
-
-
-
-
-
-
-
-
-
109,020
109,020
367,047
109,020
109,020
367,047
79,612
79,612
247,427
72,864
72,864
135,500
60,750
636,977
-
-
-
-
-
-
-
-
162,746
167,737
152,476
152,476
382,927
60,750 1,688,773
-
-
-
-
-
-
-
-
-
-
127,735
82,855
86,307
89,944
48,209
31,509
466,559
-
-
-
-
-
-
-
954,532
61%
954,532
-
721,313
56%
54%
-
-
-
-
1,179,391
46,775
91,952
242,625
9,176
195,688
261,496
261,496
760,515
60,750 3,109,864
(1) All amounts translated from Australian Dollars to United States Dollars at an average exchange for the year ended 31 December 2020 of 0.6905.
(2) Represents annual leave and long service leave entitlements, being the movement in the entitlements measured on an accrual basis during the
financial period.
(3) During the year, the Company received shareholder approval of a Non-Executive Director Share Plan, which is a salary sacrifice plan pursuant
to which NED’s may elect to sacrifice up to 100% of their annual NED’s fees to acquire Non-Executive Director Share Rights (NED Rights). The
Company issued a total of 188,324 NED Rights in relation to the March 2020 quarter, specifically for the months of February 2020 and March 2020
during the year. NED Rights in relation to the June 2020, September 2020, and December 2020 quarters were issued on 18 March 2022.
(4) Represents STI payments made in shares on 17 March 2021, and cash on 12 March 2021, in respect of performance for the year ended 31
December 2020 as approved by the Remuneration, Nomination and Governance Committee.
(5) Represents amounts expensed through the Company’s profit and loss for performance rights and options issued under the Company’s LTIP and
EIP. These amounts are recognised in the Company’s profit and loss over the vesting period in accordance with AASB 2 Share-based Payments.
(6) Director’s fees paid to J Askew are paid to International Mining and Finance Corp, a company of which he is a Director.
(7) The Board of Directors has also resolved to grant 100,000 performance rights to J Beevers as part of his Director Contract, subject to shareholder
approval at the 2021 Annual General Meeting.
(8) S Riggall ceased as a Non-Executive Director of the Company effective from 22 May 2020.
(9) The Board of Directors has resolved to grant 467,727 EIP performance rights to S Verner and 537,020 performance rights to other Key Management
Personnel for the year ending 31 December 2020. The performance rights granted to S Verner remain subject to shareholder approval.
(10) J Morrissey ceased employment with the Company on 31 March 2020.
(11) J Currie ceased employment with the Company as Chief Legal Officer on 28 January 2020.
(12) Non-Executive Directors are entitled to receive a travel stipend of $3,452 (A$5,000) for each international trip where the travel time is in excess of
seven hours of international travel.
40
SYRAH RESOURCES > ANNUAL REPORT 2021
(G) EXECUTIVE SERVICE AGREEMENTS
Remuneration and other key terms of employment for Executive Directors and Key Management Personnel for the year ending
31 December 2021 as formalised in Employment Agreements and summarised in the following table:
Table 14: Overview of Executive Service Agreements
NAME
POSITION
S Verner
Managing Director
and Chief Executive
Officer
S Wells
Chief Financial
Officer
J Costa
Chief Operating
Officer
TERM OF
AGREEMENT
TOTAL
FIXED
REMUNER-
ATION
ANNUAL STI
OPPORT-
UNITY
ANNUAL
LTI GRANT
NOTICE
PERIOD BY
EXECUTIVE
NOTICE
PERIOD BY
COMPANY
TERMINATION
PAYMENT
Ongoing
A$495,000 75% of TFR
75% of TFR 6 months
6 months
Ongoing
A$412,500 50% of TFR
50% of TFR 6 months
6 months
Ongoing
A$440,000 50% of TFR
50% of TFR 6 months
6 months
12 months
Total Fixed
Remuneration
6 months
Total Fixed
Remuneration
6 months
Total Fixed
Remuneration
(H) TERMS AND CONDITIONS OF SHARE-BASED PAYMENT
ARRANGEMENTS
Performance Rights
The terms and conditions of each grant of performance rights affecting the remuneration of Directors and Key Management
Personnel in the current or a future reporting period are as follows:
Table 15: Overview of Performance Rights
GRANT DATE
21-Mar-19
27-May-19
06-Mar-20
12-Mar-20
22-May-20
22-May-20
22-May-20
02-Jun-20
08-Mar-21
21-May-21
21-May-21
TOTAL
VESTING
DATE
01-Jan-22
01-Jan-22
01-Jan-23
01-Jan-22
01-Jan-23
Various
03-Jun-22
Various
01-Jan-24
01-Jan-24
22-May-23
EXERCISE
PRICE
-
NUMBER OF
RIGHTS(1)
128,923(2)
VALUE PER RIGHT
AT GRANT DATE
A$1.70
-
-
-
-
-
-
-
-
-
-
217,558(2)
994,172
48,015
865,892
3,844,000
100,000
5,002,500
537,020
467,727
100,000
12,305,807
A$1.70
A$0.30
A$0.04
A$0.18
A$0.29
A$0.29
A$0.30
A$0.86
A$0.68
A$0.93
(1) The Board of Directors has resolved to grant 345,513 Performance Rights to Key Management Personnel pursuant to the LTI program in respect of
the period commencing 1 January 2022 which were issued on 10 March 2022. In addition, the Board resolved to grant Performance Rights to
S. Verner as his LTI, in respect of the period commencing on 1 January 2022, subject to shareholder approval.
(2) These Performance Rights lapsed subsequent to year end as a result of vesting conditions not being met.
The proportion of Performance Rights that vest is determined in accordance with the Vesting Conditions. Any Performance Rights
that do not vest at the end of the Vesting Period will lapse. The LTIP provides that vested Performance Rights that have not been
exercised or automatically exercised (depending on the terms of the relevant offer letter) will expire two years from the First
Exercise Date (unless otherwise stated in the relevant offer letter or certificate). The EIP provides that performance rights will lapse
on the earlier of the date so nominated in the offer letter (2021/2020: two years from the date of the vesting notice), 15 years after
allocation (if no date is specified), in accordance with the rules of the EIP, upon a failure to meet a Vesting Condition (or any other
applicable condition) or receipt of a notice from the participant electing to surrender the Right.
41
Options
The terms and conditions of each grant of options affecting the remuneration of Directors and Key Management Personnel in
the current or a future reporting period are as follows:
Table 16: Overview of Options
GRANT DATE
7-Oct-19
VESTING
DATE
7-Oct-20
EXPIRY
DATE
7-Oct-22
EXERCISE
PRICE
A$0.70(2)
NUMBER OF
RIGHTS
600,000(1)
VALUE PER RIGHT
AT GRANT DATE
A$0.19
(1) 600,000 unlisted options issued to S Wells, Chief Financial Officer.
(2) Effective from 17 March 2022, the exercise price of these options was reduced by $0.03 (3 cents) per option to $0.67 in accordance with the terms
of the Employee Incentive Plan adopted on 17 May 2018 and refreshed on 21 May 2021, ASX Listing Rules 3.11.2 and 6.22 as a result of the
issuance of shares from a 1 for 5.9 pro-rata accelerated non-renounceable entitlement offer.
Non-Executive Director Share Rights
The terms and conditions of each grant of Non-Executive Director Share Rights affecting the remuneration of Directors in the
current or a future reporting period are as follows:
Table 17: Overview of Non-Executive Director Share Rights
GRANT DATE
2-Jun-20
5-Jun-20
6-Jun-20
TOTAL
VESTING
DATE
31-Mar-21
31-Mar-21
31-Mar-21
EXERCISE
PRICE
-
-
-
NUMBER OF RIGHTS
70,696
VALUE PER RIGHT
AT GRANT DATE
A$0.29
6,318
111,310
188,324(1)
A$0.41
A$0.41
(1) During the prior year, the Company received shareholder approval of a Non-Executive Director Share Plan, which is a salary sacrifice plan pursuant
to which NED’s may elect to sacrifice up to 100% of their annual NED’s fees to acquire Non-Executive Director Share Rights (NED Rights). The
Company issued a total of 188,324 NED Rights in relation to the March 2020 quarter, specifically for the months of February 2020 and March
2020 during the prior year. These securities were issued under ASX Listing Rule 10.14. NED Rights in relation to the June 2020, September 2020,
December 2020, March 2021, June 2021, September 2021 and December 2021 quarters were issued subsequent to 31 December 2021, on 18
March 2022. A resolution was included in the 2021 Notice of Annual General Meeting, in which shareholder approval was sought and obtained on
21 May 2021 in relation to adding J. Beevers into the Non-Executive Director Share Plan as an eligible participant.
42
SYRAH RESOURCES > ANNUAL REPORT 2021 (I) DIRECTORS AND KEY MANAGEMENT PERSONNEL EQUITY
HOLDINGS
Shareholdings
A reconciliation of the number of shares held by Directors and Key Management Personnel, including their personally related
parties, in the Company is set out below:
Table 18: Shares Held by Directors/Key Management Personnel
BALANCE
1 JANUARY
2021
ORDINARY
SHARES
GRANTED
ORDINARY
SHARES
ISSUED ON
EXERCISE OF
OPTIONS
ON MARKET
ACQUISITIONS/
(DISPOSALS)
BALANCE
31 DECEMBER
2021
OTHER(1)
DIRECTORS
J Askew
J Caldeira
L Bahash
S Watts
J Beevers
497,517
12,082
15,583
38,000
33,000
-
-
-
-
-
EXECUTIVE DIRECTOR
S Verner
547,174
126,813(2)(3)
KEY MANAGEMENT PERSONNEL
70,774
S Wells
J Costa
222,269
84,756(3)(4)
92,605(3)(4)
(1) Represents participation in the Share Purchase Plan.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
523,250
(239,851)
9,420
506,937
-
-
3,140
-
-
9,420
9,420
12,082
15,583
41,140
33,000
673,987
164,950
607,693
(2) Fully paid ordinary shares issued to S Verner pursuant to the resolution passed at Annual General Meeting 21 May 2021.
(3) The Board of Directors resolved to issue 111,287 shares to S Verner and 155,420 shares to Key Management Personnel pursuant to the STI
Program for the 2021 year. The shares to be to be issued to S Verner remain subject to shareholder approval at the Annual General Meeting. The
shares issued to Key Management Personnel were issued on 10 March 2022 and are not included in the above reconciliation.
(4) Shares issued on 17 March 2021 pursuant to the STI Program in respect of the year ended 31 December 2020.
43
Performance rights
A reconciliation of the number of Performance Rights held by Directors and Key Management Personnel, including their
personally related parties, in the Company is set out below.
Table 19: Performance Rights Held by Directors/Key Management Personnel
BALANCE
1 JANUARY
2021
GRANT
GRANTED
DURING
THE
PERIOD
LAPSED
DURING
THE
PERIOD
NET
CHANGE
OTHER(7)
BALANCE
31
DECEMBER
2021
VESTED UNVESTED
VALUE OF
RIGHTS
GRANTED
DURING
THE
PERIOD(8)
MAXIMUM
VALUE YET
TO VEST(9)
DIRECTORS
S Verner
2021(1)
-
467,727
-
2020
2019
2018
4,865,892
217,558
93,974
-
-
-
(156,000)
-
(93,974)
Total
5,177,424
467,727
(249,974)
J Beevers
2021(6)
S Watts
Total
2020
Total
-
-
100,000
100,000
100,000
100,000
-
-
KEY MANAGEMENT PERSONNEL
J Costa
2021(1)
-
277,172
-
-
-
-
-
-
-
-
-
-
-
-
-
100,000
100,000
100,000
100,000
277,172
2020
2019
2018
3,763,121
128,923
32,485
-
-
-
(126,750)
(523,250)
3,113,121
-
(32,485)
-
-
128,923
-
Total
3,924,529
277,172
(159,235)
(523,250)
3,519,216
S Wells
2021(1)
259,848
259,848
467,727
-
467,727
316,300
211,060
4,709,892
644,000
4,065,892(2)
217,558
-
-
-
217,558(3)
-
-
-
-
748,632
-
-
5,395,177
644,000
4,751,177
316,300
959,692
-
-
-
-
-
-
-
-
-
100,000
100,000
100,000
100,000
93,000
93,000
-
-
43,060
43,060
4,075
4,075
277,172
238,063
158,854
3,113,121(4)
128,923(3)
-
3,519,216
259,848
-
-
-
238,063
223,183
-
625,981
-
-
784,835
148,925
490,060
2020
3,029,066
-
(97,500)
Total
3,029,066
259,848
(97,500)
-
-
2,931,566
402,500
2,529,066(5)
3,191,414
402,500
2,788,914
223,183
638,985
(1) The Board of Directors has also resolved to grant Performance Rights to S Verner as his LTI, in respect of the period commencing on 1 January
2022, subject to shareholder approval. 1,167,263 Performance Rights were issued to Key Management Personnel and other executives and
senior managers pursuant to the LTI program in respect of the period commencing on 1 January 2022. The performance rights issued to Key
Management Personnel were issued on 10 March 2022 and are not included in the above reconciliation. J Costa and S Wells were granted 184,643
and 160,870 performance rights respectively in relation to the LTI program in respect of the period commencing on 1 January 2022.
(2) The performance rights issued under the 5YPRI program in 2020 were subject to testing of vesting conditions in early 2022 in relation to Year 2
of the five-year 5YPRI program. The Board approved that 100% of the Year 2 5YPRI program vested following the end of the 31 December 2021
performance period, resulting in 800,000 5YPRI Performance Rights vesting for S. Verner.
(3) The performance rights issued under the LTI Program in 2019, were subject to testing of vesting conditions in early 2022. All such rights lapsed on
their terms.
(4) The performance rights issued under the 5YPRI program in 2020 were subject to testing of vesting conditions in early 2022 in relation to Year 2
of the five-year 5YPRI program. The Board approved that 100% of the Year 2 5YPRI program vested following the end of the 31 December 2021
performance period, resulting in 650,000 5YPRI Performance Rights vesting for J. Costa.
(5) The performance rights issued under the 5YPRI program in 2020 were subject to testing of vesting conditions in early 2022 in relation to Year 2
of the five-year 5YPRI program. The Board approved that 100% of the Year 2 5YPRI program vested following the end of the 31 December 2021
performance period, resulting in 500,000 5YPRI Performance Rights vesting for S. Wells. In addition, 48,015 performance rights issued in relation to
the 2019 LTI, were subject to testing of vesting conditions in early 2022. All such rights lapsed on their terms.
(6) 100,000 Performance Rights granted to J Beevers following shareholder approval at the Company’s Annual General Meeting held on 21 May 2021.
(7) Performance Rights exercised during the period.
(8) The value at grant date calculated in accordance with AASB 2 Share-based Payment of performance rights granted during the year as part of
remuneration.
(9) The maximum value of the performance rights yet to vest has been determined as the amount of the grant date fair value of the rights that is yet to
be expensed. The minimum value of the performance rights yet to vest is nil, as the rights will lapse if the vesting conditions are not met.
44
SYRAH RESOURCES > ANNUAL REPORT 2021 Non-Executive Director Share Rights
A reconciliation of the number of Non-Executive Director Share Rights held by Directors, including their personally related
parties, in the Company is set out below.
Table 20: Non-Executive Director Share Rights Held by Directors
BALANCE
1 JANUARY
2021
GRANT
GRANTED
DURING
THE
PERIOD
LAPSED
DURING
THE
PERIOD
NET
CHANGE
OTHER
BALANCE
31 DECEMBER
2021
VESTED UNVESTED
DIRECTORS
J Askew
J Caldeira
L Bahash
S Watts
J Beevers(2)
2021(1)
2020
Total
2021(1)
2020
Total
2021(1)
2020
Total
2021(1)
2020
Total
2021(1)
2020
Total
-
111,310
111,310
-
34,596
34,596
-
36,100
36,100
-
6,318
6,318
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
111,310
111,310
111,310
-
111,310
-
34,596
34,596
-
36,100
36,100
-
6,318
6,318
-
-
-
34,596
34,596
-
36,100
36,100
-
6,318
6,318
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1) During the prior year, the Company received shareholder approval of a Non-Executive Director Share Plan, which is a salary sacrifice plan pursuant
to which NED’s may elect to sacrifice up to 100% of their annual NED’s fees to acquire Non-Executive Director Share Rights (NED Rights). The
Company issued a total of 188,324 NED Rights in relation to the March 2020 quarter, specifically for the months of February 2020 and March
2020 during the prior year. These securities were issued under ASX Listing Rule 10.14. NED Rights in relation to the June 2020, September 2020,
December 2020, March 2021, June 2021, September 2021 and December 2021 quarters were issued subsequent to 31 December 2021, on 18
March 2022. In accordance with the NEDSP, the number of NED Rights issued was calculated having regard to a 30-trading day volume weighted
average price of Syrah’s shares on the ASX during the relevant quarter to which the grant relates. Accordingly, J. Askew, J. Caldeira, L. Bahash, S.
Watts, and J. Beevers were issued with 457,797; 142,278; 148,470; 19,613 and 13,797 NED Rights, respectively.
(2) A resolution was included in the 2021 Notice of Annual General Meeting, in which shareholder approval was sought and obtained on 21 May 2021
in relation to adding J. Beevers into the Non-Executive Director Share Plan as an eligible participant.
Options
A reconciliation of the number of Options held by Directors and Key Management Personnel, including their personally related
parties, over unissued ordinary shares in the Company is set out below:
Table 21: Options Held by Directors/Key Management Personnel
GRANTED
BALANCE
DURING
THE
PERIOD
BALANCE
1 JANUARY
2021
OPTIONS
EXERCISED
DIRECTORS
L Bahash
400,000
KEY MANAGEMENT PERSONNEL
J Costa
600,000
S Wells
600,000
-
-
-
-
-
-
NET
CHANGE
OTHER (INC
EXPIRY /
LAPSE)
(400,000)
(600,000)
BALANCE
31 DECEMBER
2021 VESTED UNVESTED
EXERCISE
PRICE
-
-
-
-
-
-
-
$2.86(1)
$4.34(1)
$0.70(2)
-
600,000
600,000
(1) Effective from 30 July 2019, the exercise price of these options was reduced by $0.03 (3 cents) per option in accordance with the terms of the
Long-Term Incentive Plan dated 13 May 2015, ASX Listing Rules 3.11.2 and 6.22 as a result of the issuance of shares from a 1 for 5 pro-rata
accelerated non-renounceable entitlement offer.
(2) Effective from 17 March 2022, the exercise price of these options was reduced by $0.03 (3 cents) per option to $0.67 in accordance with the terms
of the Employee Incentive Plan adopted on 17 May 2018 and refreshed on 21 May 2021, ASX Listing Rules 3.11.2 and 6.22 as a result of the
issuance of shares from a 1 for 5.9 pro-rata accelerated non-renounceable entitlement offer.
45
(J) OTHER TRANSACTIONS WITH DIRECTORS AND KEY MANAGEMENT
PERSONNEL
Aggregate amounts of other transactions with Directors and Key Management Personnel is set out below
Table 22: Transactions with Directors/ Key Management Personnel
Provision of services
Legal services provided by Sal & Caldeira Advogados, Lda(1)
77,084
79,989
(1) Represents legal services provided to the Company by Sal & Caldeira Advogados, Ltd in Mozambique. J Caldeira is a Non-Executive Director of
the Company and is a Senior Partner at Sal & Caldeira Advogados, Lda.
These services are provided on arm’s length commercial terms and conditions. Where any director has a conflict of interest
they do not participate in any decision of the Board or management in relation to that matter.
The following balances were outstanding at the end of the period in relation to the above transactions:
2021
US$
2020
US$
2021
US$
2020
US$
Trade and other payables
Legal Services provided by Sal & Caldeira Advogados, Lda(1)
11,535
-
(1) Represents outstanding balances arising of legal services provided to the Company by Sal & Caldeira Advogados, Ltd in Mozambique. J Caldeira
is a Non-Executive Director of the Company and is a Senior Partner at Sal & Caldeira Advogados, Lda.
There are no loans made from or to Directors or Key Management Personnel, or related entities, by the Group
(K) ADDITIONAL INFORMATION
The Company aims to align executive remuneration to drive short, medium and long-term outcomes for the business which
creates shareholder value. The table below shows the Group’s performance over the past five years. These performance
measures may not necessarily be consistent with the measures used in determining performance-based remuneration and
accordingly there may not always be a direct correlation between these measures and the variable remuneration awarded.
Market capitalisation (US$’000)
Closing share price (US$)
Loss after income tax for the period (US$’000)
Basic earnings per share (US cents)
31-DEC
2021
644,150
1.29
(56,870)
(10.79)
31-DEC
2020
352,754
0.74
31-DEC
2019
136,156
0.33
31-DEC
2018
386,705
1.13
31-DEC
2017
1,045,520
3.52
(60,870)
(130,549)
(28,970)
(28,970)
(14.59)
(34.56)
(9.30)
(4.51)
46
SYRAH RESOURCES > ANNUAL REPORT 2021
Share Options and Performance Rights
(i)
Unissued ordinary shares
Unissued ordinary shares of Syrah Resources Limited under option, performance rights and Non-Executive Director Share
Rights as at 31 December 2021 are as follows:
Table 23: Unissued Ordinary Shares under Option, Performance Rights and Non-Executive Director Share Rights
VESTING AND
EXERCISABLE
DATE
EXPIRY
DATE
EXERCISE
PRICE
NUMBER OF
SHARES UNDER
OPTION /
PERFORMANCE
RIGHTS
VALUE PER
OPTION/
PERFORMANCE
RIGHT AT GRANT
DATE
GRANT DATE
Share Options
Equity Incentive Plan (“EIP”)
07-Oct-19
07-Oct-20
07-Oct-22
A$0.70(1)
Total Options
Performance Rights
EIP
21-Mar-19
27-May-19
30-Aug-19
06-Mar-20
12-Mar-20
22-May-20
22-May-20
02-Jun-20
22-May-20
21-May-21
21-May-21
17-Mar-21
07-Apr-21
24-May-21
24-May-21
29-Jun-21
20-Dec-21
01-Jan-22
01-Jan-22
31-Dec-20
01-Jan-23
01-Jan-22
01-Jan-23
Various
Various
03-Jun-22
22-May-23
01-Jan-24
01-Jan-24
Various
Various
01-Jan-24
01-Jan-24
01-Jan-24
Total Performance Rights
Non-Executive Director Share Rights
31-Mar-21
2-Jun-20
5-Jun-20
6-Jun-20
31-Mar-21
31-Mar-21
Total Non-Executive Director Share Rights
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
600,000
600,000
489,840(2)
217,558(2)
163,641
2,765,268
67,287(2)
865,892
3,844,000
6,083,625(2)
100,000
100,000
467,727
1,360,528
400,000
816,164
206,681
38,357
20,709
18,007,277(2)
70,696(3)
6,318(3)
111,310(3)
188,324
A$0.19
A$1.70
A$1.70
A$0.70
A$0.30
A$0.04
A$0.18
A$0.29
A$0.30
A$0.29
A$0.93
A$0.68
A$0.86
A$1.10
A$1.04
A$0.80
A$0.77
A$0.97
A$0.29
A$0.41
A$0.41
(1) Effective from 17 March 2022, the exercise price of these options was reduced by $0.03 (3 cents) per option to $0.67 in accordance with the terms
of the Employee Incentive Plan adopted on 17 May 2018 and refreshed on 21 May 2021, ASX Listing Rules 3.11.2 and 6.22 as a result of the
issuance of shares from a 1 for 5.9 pro-rata accelerated non-renounceable entitlement offer.
(2) The Board of Directors has also resolved to grant 1,167,263 Performance Rights to Key Management Personnel and other executives and senior
managers pursuant to the LTI program and were issued on 10 March 2022 in respect of the period commencing 1 January 2022. In addition, the
Board of Directors has also resolved to grant Performance Rights to S Verner as his LTI in respect of the period commencing on 1 January 2022,
subject to shareholder approval. Subsequent to 31 December 2021, a total of 1,550,861 Performance Rights lapsed unexercised.
(3) During the prior year, the Company received shareholder approval of a Non-Executive Director Share Plan, which is a salary sacrifice plan pursuant
to which NED’s may elect to sacrifice up to 100% of their annual NED’s fees to acquire Non-Executive Director Share Rights (NED Rights). The
Company issued a total of 188,324 NED Rights in relation to the March 2020 quarter, specifically for the months of February 2020 and March
2020 during the prior year. These securities were issued under ASX Listing Rule 10.14. NED Rights in relation to the June 2020, September 2020,
December 2020, March 2021, June 2021, September 2021 and December 2021 quarters were issued subsequent to 31 December 2021, on 18
March 2022. In accordance with the NEDSP, the number of NED Rights issued was calculated having regard to a 30-trading day volume weighted
average price of Syrah’s shares on the ASX during the relevant quarter to which the grant relates. Accordingly, J. Askew, J. Caldeira, L. Bahash, S.
Watts, and J. Beevers were issued with 457,797; 142,278; 148,470; 19,613 and 13,797 NED Rights, respectively. A resolution was included in the
2021 Notice of Annual General Meeting, in which shareholder approval was sought and obtained on 21 May 2021 in relation to adding J. Beevers
into the Non-Executive Director Share Plan as an eligible participant.
47
The proportion of Performance Rights that vest is determined
in accordance with the Vesting Conditions. Any Performance
Rights that do not vest at the end of the Vesting Period will
lapse. The LTIP provides that vested Performance Rights
will that have not been exercised or automatically exercised
(depending on the terms of the relevant offer letter) will expire
two years from the First Exercise Date (unless otherwise stated
in the relevant offer letter or certificate). The Equity Incentive
Plan provides that performance rights will lapse on the earlier
of the date so nominated in the offer letter, in accordance with
the rules of the Equity Incentive Plan, upon failure to meet a
Vesting Condition (or any other applicable condition) or receipt
of a notice from the participant electing to surrender the Right.
No option holder has any right under the options to participate
in any share issue of the Company.
INDEMNIFICATION OF OFFICERS
During the year the Company paid a premium in respect of a
contract insuring the directors of the Company, the company
secretary and all executive officers of the Company and of
any related body corporate against a liability incurred as
such a director, secretary or executive officer to the extent
permitted by the Corporations Act. The contract of insurance
prohibits disclosure of the nature of the liability and the
amount of the premium.
The Company has entered into a Deed of Indemnity,
Insurance and Access with each director, secretary and
executive officer. In summary the Deed provides for:
> Access to corporate records for each director, secretary
or executive officer for a period after ceasing to hold
office in the Company;
> The provision of Directors and Officers Liability
Insurance; and
or executive officers in carrying out the business affairs of
the Company.
INDEMNITY OF AUDITORS
The Company has entered into an agreement to indemnify
its auditor, PricewaterhouseCoopers Australia, against
any claims or liabilities (including legal costs) asserted by
third parties arising out of their services as auditor of the
Company, where the liabilities arise as a direct result of the
Company’s breach of its obligations to the Auditors, unless
prohibited by the Corporations Act.
AUDITOR
PricewaterhouseCoopers continues in office in accordance
with section 327 of the Corporations Act.
48
AUDIT AND NON-AUDIT SERVICES
Details of amounts paid or payable to the auditor for audit and
non-audit services provided during the year are set out below:
The Board of Directors has considered the position and,
in accordance with advice received from the Audit and
Risk Committee, is satisfied that the provision of the non-
audit services is compatible with the general standard of
independence for auditors imposed by the Corporations Act.
The Directors are satisfied that the provision of non-audit
services by the auditor, as set out below, did not compromise
the auditor independence requirements of the Corporations
Act for the following reasons:
> All non-audit services have been reviewed by the Audit
and Risk Committee to ensure they do not impact the
impartiality and objectivity of the auditor; and
> None of the services undermine the general principles
relating to auditor independence as set out in APES 110
Code of Ethics for Professional Accountants.
During the financial year the following fees were paid or
payable for services provided by the auditor of the parent
entity, its related practices and non-related audit firms.
2021
US$’000
2020
US$’000
Assurance Services
PwC Australian firm
Network firms of PwC
Australian firm
Total remuneration for audit
services
Non-assurance services
Tax compliance services
Tax consulting services
Network firms of PwC
Australian firm
Other consulting services
Total remuneration for non-
assurance services
Total remuneration paid to
PricewaterhouseCoopers
191
79
270
34
60
-
94
364
209
65
274
28
73
4
105
379
The Group’s policy allows the engagement of
PricewaterhouseCoopers on certain assignments additional
to their statutory audit duties where PricewaterhouseCoopers
expertise and experience with the Group are important,
subject to a cap in fees on individual assignments, and a
cap on aggregate fees over the course of a year. Certain
assignments, and assignments in excess of these caps,
require approval from the Audit and Risk Committee.
These assignments are principally tax consulting and advice
or where PricewaterhouseCoopers is awarded assignments
on a competitive basis. It is the Group’s policy to seek
competitive tenders for all major consulting assignments.
> Indemnity for legal costs incurred by directors, secretary
PwC Australian firm
SYRAH RESOURCES > ANNUAL REPORT 2021
AUDITOR’S INDEPENDENCE
DECLARATION
A copy of the auditor’s independence declaration as
required under section 307C of the Corporations Act is set
out on page 50.
ROUNDING OF AMOUNTS
The amounts contained in this report and in the financial
report have been rounded off to the nearest US$’000 (where
rounding is applicable) under the relief available to the
Company under ASIC Corporations (Rounding in Financial/
Directors Reports) Instrument 2016/191. The Company is an
entity to which the Class Order applies.
The report is made in accordance with a resolution of
Directors.
Shaun Verner
Managing Director and Chief Executive Officer
Melbourne, Australia
24 March 2022
49
AUDITOR’S INDEPENDENCE DECLARATION
Auditor’s Independence Declaration
As lead auditor for the audit of Syrah Resources Limited for the year ended 31 December 2021, I
declare that to the best of my knowledge and belief, there have been:
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Syrah Resources Limited and the entities it controlled during the
period.
Ben Gargett
Partner
PricewaterhouseCoopers
Melbourne
24 March 2022
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
50
SYRAH RESOURCES > ANNUAL REPORT 2021
CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021
The financial statements are presented
in US Dollars.
CONTENT
PAGE
Syrah Resources Limited is a company
limited by shares, incorporated and
domiciled in Australia.
Registered Office:
c/- Vistra Australia (Melbourne) Pty
Ltd Level 4 96-100 Albert Road,
South Melbourne, VIC 3205
Principal Place of Business:
c/- Work Club Melbourne
Olderfleet
477 Collins Street,
Melbourne, VIC 3000
A description of the nature of the
consolidated entity’s operations and
its principal activities is included in
the Directors’ Report on pages 5 to
22, which is not part of these financial
statements.
The financial statements were
authorised for issue by the Directors
on 24 March 2022. The Directors have
the power to amend and reissue the
financial statements.
All press releases, financial reports and
other information are available on our
website: www.syrahresources.com.au
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF CASH FLOWS
NOTE HOW THE NUMBERS ARE CALCULATED
1
2
3
4
5
6
7
8
9
10
11
INTRODUCTION
SEGMENT INFORMATION
REVENUE
COST OF SALES
DISTRIBUTION COSTS
ADMINISTRATIVE EXPENSES
INCOME TAX EXPENSE
FINANCIAL ASSETS AND FINANCIAL LIABILITIES
NON-FINANCIAL ASSETS AND NON-FINANCIAL
LIABILITIES
EQUITY
RECONCILIATION OF LOSS AFTER INCOME TAX TO
NET CASH OUTFLOW FROM OPERATING ACTIVITIES
RISK
12
FINANCIAL RISK MANAGEMENT
UNRECOGNISED ITEMS
13
14
15
16
17
18
19
20
21
22
COMMITMENTS, CONTINGENCIES AND GUARANTEES
EVENTS OCCURRING AFTER THE REPORTING PERIOD
ADDITIONAL OTHER INFORMATION
RELATED PARTY TRANSACTIONS
SHARE-BASED PAYMENTS
REMUNERATION OF AUDITORS
EARNINGS PER SHARE
PARENT ENTITY FINANCIAL INFORMATION
SUBSIDIARIES
DEED OF CROSS GUARANTEE
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
52
53
54
55
56
57
58
59
59
59
60
60
62
64
70
72
73
74
77
78
78
79
80
81
84
84
85
86
86
89
51
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2021
Revenue from continuing operations
Revenue
Cost of sales
Gross profit/(loss)
Distribution costs
Administrative expenses
Other income/(expenses)
Write-down of inventories
Total expenses
NOTES
3
4
5
6
2021
US$’000
29,044
(61,663)
(32,619)
(7,158)
(9,546)
2,671
(1,296)
2020
US$’000
10,789
(49,281)
(38,492)
(3,854)
(6,611)
(2,214)
(2,594)
(15,329)
(15,273)
Profit/(loss) before net finance income and income tax
(47,948)
(53,765)
Finance income
Finance expenses
Net finance income/(expenses)
Profit/(loss) before income tax
130
(6,345)
(6,215)
372
(4,770)
(4,398)
(54,163)
(58,163)
Income tax (expense)/benefit
7
(2,707)
(2,707)
Loss after income tax for the year
(56,870)
(60,870)
Other comprehensive income/(loss)
Items that may be reclassified subsequently to the profit or loss
Exchange differences on translation of foreign subsidiaries
10b
Other comprehensive income/(loss) for the year, net of tax
354
354
(817)
(817)
Total comprehensive income/(loss) for the year
(56,516)
(61,687)
Total comprehensive income/(loss) for the year attributable to:
- Equity holders of Syrah Resources Limited
- Non-controlling interest
Loss per share attributable to the owners of
Syrah Resources Limited
Basic loss per share
Diluted loss per share
18
18
(53,560)
(2,956)
(56,516)
Cents
(10.79)
(10.79)
(61,687)
-
(61,687)
Cents
(14.59)
(14.59)
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
52
SYRAH RESOURCES > ANNUAL REPORT 2021
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2021
NOTES
2021
US$’000
2020
US$’000
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Available-for-sale financial assets
Total current assets
Non-current assets
Trade and other receivables
Property, plant and equipment
Mining assets
Intangible assets
Deferred tax assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Lease liabilities
Provisions
Total current liabilities
Non-current liabilities
Trade and other payables
Borrowings
Lease liabilities
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Non-controlling interest
Total equity
8a
8b
9a
8b
9c
9b
9d
8c
8d
9e
8c
8e
8d
9d
9e
10a
10b
10c
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
52,914
7,865
20,385
395
81,559
7,955
180,520
132,764
129
25,961
347,329
428,888
18,062
3,229
2,173
23,464
1,496
69,852
12,980
3,622
24,960
112,910
136,374
74,992
1,937
15,737
299
92,965
13,248
164,444
134,208
93
26,984
338,977
431,942
6,588
1,417
841
8,846
985
47,468
15,354
1,938
24,559
90,304
99,150
292,514
332,792
619,285
(14,008)
(317,008)
4,245
292,514
604,920
(7,994)
(264,134)
-
332,792
53
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
Balance at 1 January 2021
Loss after income tax expense for the year
Non-controlling interest
Other comprehensive income/(loss) for the
year, net of tax
Total comprehensive income/(loss) for the year
Transactions with owners in their capacity as
owners:
Contributions of equity, net of transaction
costs
Share-based payments
Issuance of 5% Non-controlling interest
Transfers from share-based payments reserve:
-
Issuance of shares
- Expired/lapsed options and performance
rights
CONTRI-
BUTED
EQUITY
US$’000
604,920
-
-
-
-
13,488
-
-
877
-
14,365
ACCUM-
ULATED
LOSSES
US$’000
(264,134)
(53,914)
-
-
NON-CON-
TROLLING
INTEREST
US$’000
-
-
(2,956)
-
(53,914)
(2,956)
RESERVES
US$’000
(7,994)
-
-
354
354
TOTAL
EQUITY
US$’000
332,792
(53,914)
(2,956)
354
(56,516)
-
-
-
-
1,040
1,040
-
-
7,201
-
-
7,201
-
13,488
2,750
(7,201)
(877)
(1,040)
(6,368)
2,750
-
-
-
16,238
Balance at 31 December 2021
619,285
(317,008)
4,245
(14,008)
292,514
Balance at 1 January 2020
563,694
(204,496)
Loss after income tax expense for the year
Other comprehensive income/(loss) for the
year, net of tax
Total comprehensive income/(loss) for the year
-
-
-
(60,870)
-
(60,870)
Transactions with owners in their capacity
as owners:
Contributions of equity, net of transaction
costs
Share-based payments
Transfers from share-based payments reserve:
-
Issuance of shares
- Expired/lapsed options and performance
rights
40,809
-
417
-
41,226
-
-
-
1,232
1,232
Balance at 31 December 2020
604,920
(264,134)
-
-
-
-
-
-
-
-
-
-
(7,337)
-
(817)
(817)
351,861
(60,870)
(817)
(61,687)
-
40,809
1,809
1,809
(417)
(1,232)
160
(7,994)
-
-
42,618
332,792
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
54
SYRAH RESOURCES > ANNUAL REPORT 2021
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2021
Cash flows from operating activities
Receipts from customers
NOTES
2021
US$’000
2020
US$’000
25,361
12,845
Payments to suppliers and employees (inclusive of goods and services
tax)
Interest received
Net cash inflow/(outflow) from operating activities
11
Cash flows from investing activities
Payments for property, plant and equipment
Payments for intangibles
Payments for security deposits
Receipts from security deposits
Net cash inflow/(outflow) from investing activities
Cash flows from financing activities
Proceeds from issue of shares
Proceeds from issue of convertible note
Share issue transaction costs
Payment for interest on lease liabilities
Payments of lease liabilities
Repayment of borrowings
Proceeds from borrowings
Net cash inflow/(outflow) from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at end of the financial year
8a
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
(60,564)
135
(35,068)
(21,622)
(86)
-
2,363
(19,345)
13,733
21,050
(223)
(1,215)
(583)
-
-
32,762
(21,651)
74,992
(427)
52,914
(46,233)
472
(32,916)
(10,537)
-
(1,252)
-
(11,789)
42,363
-
(1,554)
(1,214)
(1,064)
(210)
210
38,531
(6,174)
80,577
589
74,992
55
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
HOW THE NUMBERS ARE CALCULATED
This section provides additional information about those individual line items in the financial
statements that the directors consider most relevant in the context of the operations of the
Group, including:
a.
b.
c.
accounting policies that are relevant for an understanding of the items recognised in
the financial statements. These cover situations where the accounting standards either
allow a choice or do not deal with a particular type of transaction
analysis and sub-totals, including segment information
information about estimates and judgements made in relation to particular items.
NOTE HOW THE NUMBERS ARE CALCULATED
PAGE
INTRODUCTION
SEGMENT INFORMATION
REVENUE
COST OF SALES
DISTRIBUTION COSTS
ADMINISTRATIVE EXPENSES
INCOME TAX EXPENSE
FINANCIAL ASSETS AND FINANCIAL LIABILITIES
NON-FINANCIAL ASSETS AND NON-FINANCIAL LIABILITIES
EQUITY
RECONCILIATION OF LOSS AFTER INCOME TAX TO NET CASH OUTFLOW FROM
OPERATING ACTIVITIES
57
58
59
59
59
60
60
62
64
70
72
1
2
3
4
5
6
7
8
9
10
11
56
SYRAH RESOURCES > ANNUAL REPORT 2021
NOTE 1. INTRODUCTION
a) Basis of preparation
This general purpose financial report has been prepared
in accordance with Australian Accounting Standards
and Interpretations issued by the Australian Accounting
Standards Board and the Corporations Act 2001. Syrah
Resources Limited is a for-profit entity for the purpose of
preparing the financial statements.
Compliance with IFRS
The consolidated financial statements of the Syrah
Resources Limited group also comply with International
Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB).
Historical cost convention
These financial statements have been prepared under the
historical cost convention, except for certain assets which, as
noted, are at fair value.
Critical accounting estimates
The preparation of financial statements requires the use
of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of
applying the Group’s accounting policies. The areas involving
a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the financial
statements, are disclosed in the respective notes.
Estimate and assumptions which are material to the financial
report are found in the following notes:
> Close-down restoration and environmental obligations –
estimation costs and the timing of expenditure – note 9(e)
> Recoverability of deferred tax assets for carried forward
tax losses – note 9(d)
> Recoverability of input tax credits – note 8(b)
> Carry forward value of exploration and evaluation – note
9(b)
> Provisions – note 9(e)
Parent entity information
In accordance with the Corporations Act 2001, these
financial statements present the results of the consolidated
entity only. Supplementary information about the parent entity
is disclosed in note 19.
b) Reporting currency
Functional and presentation currency
The presentation currency of the Group is US Dollars. Each
entity in the Group determines its own functional currency
and items included in the financial statements of each entity
are measured using that functional currency.
Transactions and balances
Transactions in foreign currencies are initially recorded
in the functional currency at the exchange rates ruling
at the date of the transaction. The subsequent payment
or receipt of funds related to a transaction is translated
at the rate applicable on the date of payment or receipt.
Monetary assets and liabilities that are denominated in
foreign currencies are retranslated at the rate of exchange
ruling at the reporting date. Non-monetary items that are
measured in terms of historical cost in a foreign currency
are translated using the exchange rate as at the date
of the initial transaction. All exchange differences in the
consolidated financial statements are taken to the Statement
of Comprehensive Income with the exception of exchange
differences on certain US Dollar denominated receivables
(held by the parent entity which has a functional currency of
Australian Dollars) where the foreign currency components
are deemed to be hedges of a net investment in a foreign
operation. These are recognised in other comprehensive
income and accumulated in a reserve until the amounts
are settled or the foreign operation is disposed of (for net
investment hedges), at which time they are recognised in the
Statement of Comprehensive Income.
Translation
The assets and liabilities of entities within the group with
functional currency other than US Dollars (being the
presentation currency of the Group) are translated into
US Dollars at the exchange rate at reporting date (31
December 2021: 0.7256) (31 December 2020: 0.7702) and
the Statement of Comprehensive Income is translated at the
average exchange rate for the financial year (2021: 0.7514)
(2020: 0.6905). On consolidation, exchange differences
arising from the translation of these subsidiaries are
recognised in other comprehensive income and accumulated
in the foreign currency translation reserve.
57
NOTE 2. SEGMENT INFORMATION
a) Description of segments
Management has determined and presented operating segments based on the reports reviewed by the Executive
Management Team, who are the Group’s chief operating decision makers in terms of assessing performance and allocating
resources. The Board of Directors reviews the performance of the Group on a similar basis.
The Group primarily monitors performance according to the following three segments:
Balama
Vidalia
Production, distribution and sale of natural flake graphite from the Balama Graphite Operation in
Mozambique.
Ongoing assessment and development of downstream Vidalia AAM opportunities for natural flake graphite
including the development of a processing facility in the USA, potential customer engagement, and
research and development.
Corporate Corporate administration and investing activities.
b) Segment information
Year ended 31 December 2021
Total segment revenue
Inter-segment revenue
Revenue from external customers
BALAMA
VIDALIA
CORPORATE
CONSOLIDATED
US$’000
US$’000
US$’000
US$’000
29,070
(26)
29,044
-
-
-
-
-
-
29,070
(26)
29,044
Total segment EBITDA
(31,042)
(299)
(6,497)
(37,838)
Year ended 31 December 2020
Total segment revenue
Inter-segment revenue
Revenue from external customers
10,809
(20)
10,789
-
-
-
-
-
-
10,809
(20)
10,789
Total segment EBITDA
(35,150)
(142)
(8,354)
(43,646)
28,064
17,387
12
1
53,483
75,577
81,559
92,965
268,186
278,139
79,020
60,643
123
195
347,329
338,977
(58,168)
(47,285)
(6,794)
(2,374)
(71,412)
(49,491)
(136,374)
(99,150)
Total segment current assets
31 December 2021
31 December 2020
Total segment non-current assets
31 December 2021
31 December 2020
Total segment liabilities
31 December 2021
31 December 2020
58
SYRAH RESOURCES > ANNUAL REPORT 2021
NOTE 3. REVENUE
Revenue from external customers
Timing of revenue recognition
- At a point in time – Product
- Over time – Freight
2021
US$’000
29,044
24,518
4,526
(a) Geographical information
Segment revenues from sales to external customers based on the geographical location of the port of discharge.
China
Europe
India
Americas
Other locations
2021
US$’000
13,089
9,355
2,730
3,844
26
2020
US$’000
10,789
9,536
1,253
2020
US$’000
878
5,836
1,884
1,887
304
(b) Major customer information
Revenue from seven major customers (three in China, three in Europe and one in Americas) individually accounted for
approximately 6% or greater of total segment revenues, and in aggregate amounted to $18.2 million from the sale of natural
graphite products on a CIF basis. Sales to Chinese customers were 45% of the total revenue, while sales to European,
American, and Indian customers were 32%, 13% and 9%, respectively.
29,044
10,789
NOTE 4. COST OF SALES
Mining and production costs
Logistics costs
Government royalties
Depreciation and amortisation expense
Changes in inventories
Other costs
NOTE 5. DISTRIBUTION COSTS
Shipping costs
Depreciation and amortisation
Other selling costs
2021
US$’000
44,230
11,860
433
10,151
(7,126)
2,115
61,663
2021
US$’000
5,367
38
1,753
7,158
2020
US$’000
28,395
9,634
60
9,772
892
528
49,281
2020
US$’000
1,812
62
1,980
3,854
59
NOTE 6. ADMINISTRATIVE EXPENSES
Employee benefits:
Salaries and wages
Share-based payments
Employee entitlements
Defined contribution superannuation expense
Total employee benefits expense
Legal and consulting expenses:
Legal expenses
Consulting expenses
Total legal and consulting expenses
Other expenses:
Other expenses
Total other expenses
2021
2020
US$’000
US$’000
3,337
2,770
227
237
6,571
279
1,237
1,516
1,459
1,459
2,527
1,809
161
202
4,699
189
879
1,068
844
844
Total administrative expenses
9,546
6,611
NOTE 7. INCOME TAX EXPENSE
a)
Income tax expense
Current tax expense
Deferred tax expense
Total tax expense/(benefit)
Deferred income tax
(Increase)/decrease in deferred tax assets
Increase/(decrease) in deferred tax liabilities
Total deferred tax expense/(benefit)
2021
US$’000
-
2,707
2,707
1,023
1,684
2,707
2020
US$’000
-
2,707
2,707
769
1,938
2,707
b) Numerical reconciliation of income tax for the year to prima facie tax payable
60
SYRAH RESOURCES > ANNUAL REPORT 2021
Loss from continuing operations before income tax
Tax at the Australian tax rate of 30% (2020 – 30%)
Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:
- Share-based payments
- Other non-deductible expenses
- Difference in overseas tax rates
- Movement in unrecognised temporary differences
-
(Under)/over provision in the prior year
- Current year taxation losses not recognised as deferred tax assets
- Other permanent differences
Income tax expense/(benefit)
c)
Taxation losses and unrecognised temporary differences
Unused taxation losses for which no deferred tax asset has been recognised
Potential taxation benefit at 30%
2021
US$’000
(54,163)
2020
US$’000
(58,163)
(16,249)
(17,449)
831
1,195
1,578
685
(19)
10,880
3,806
2,707
543
656
2,371
1,496
130
12,398
2,562
2,707
2021
US$’000
131,053
39,316
2020
US$’000
94,215
28,265
Temporary differences for which no deferred tax asset (net) has been recognised
2
171
The taxation benefits of taxation losses and temporary differences not brought to account will only be obtained if:
> the consolidated entity derives future assessable income of a nature and of an amount sufficient to enable the benefit from
the deductions for the losses to be realised in the respective jurisdictions and within the allowed timeframes for tax loss
utilization
> the consolidated entity continues to comply with the conditions for deductibility imposed by law; and
> no change in tax legislation adversely affects the consolidated entity in realising the benefits from deducting the losses.
61
NOTE 8. FINANCIAL ASSETS AND FINANCIAL LIABILITIES
a) Cash and cash equivalents
Cash at bank and in hand
Deposits at call
2021
US$’000
21,109
31,805
52,914
2020
US$’000
9,994
64,998
74,992
Total cash is held in current accounts or money market deposits with major financial institutions under normal terms and
conditions appropriate to the operation of the accounts. These deposits earn interest at rates set by these institutions. As at 31
December 2021 the weighted average interest rate on current accounts and term deposits was 0.21% (2020: 0.22%).
(i) Risk exposure
The Group’s exposure to foreign exchange and interest rate risk is discussed in note 12. The maximum exposure to credit risk
at the reporting date is the carrying amount of each class of cash and cash equivalents mentioned above.
b) Trade and other receivables
Current
Trade receivables
Prepayments
Other receivables
Input tax credits
Total current trade and other receivables
Non-current
Input tax credits
Provision for impairment of input tax credits(1)
Security deposits(2)
Total non-current trade and other receivables
2021
2020
US$’000
US$’000
4,316
2,876
665
8
7,865
4,678
(824)
4,101
7,955
611
500
662
164
1,937
6,784
-
6,464
13,248
(1) The Company regularly assesses the recoverability of input tax credits. As a result of the most recent assessment, the Company determined that
there was some doubt relating to the recoverability of input tax credits at Twigg prior to 2017. As a result, a provision of $0.8 million for impairment
of input tax credits has been recognised as at 31 December 2021.
(2) Security deposits are restricted deposits that are used for monetary backing for performance guarantees
(i) Classification of Trade Receivables
Trade receivables are amounts due from customers from the sale of graphite. They are generally due for settlement within
30 days and therefore are all classified as current.
(ii) Foreign exchange and interest rate risk
Information about the Group’s exposure to foreign currency risk and interest rate risk in relation to trade and other receivables
is provided in note 12.
(iii) Fair value measurement and credit risk
Due to the short-term nature of these receivables, their carrying amount is assumed to approximate their fair value. The maximum
exposure to credit risk at the end of the reporting period is the carrying amount of each class of receivables mentioned above.
Refer to note 12 for more information on the credit quality of the Group’s trade and other receivables. For non-current receivables,
the fair values are also not significantly different from their carrying amounts.
62
SYRAH RESOURCES > ANNUAL REPORT 2021
Significant estimates and judgements
As at 31 December 2021, the balance of input tax credits held by Twigg was $3.9 million (2020: $6.8 million). The Company
regularly assesses the recoverability of input tax credits. As a result of the most recent assessment, the Company determined
that there was some doubt relating to the recoverability of input tax credits at Twigg which originated prior to 2017. As a result,
a provision of $0.8 million for impairment of input tax credits has been recognised as at 31 December 2021. During the year
ended 31 December 2021, recoveries of input tax credits of $1.2 million were received (31 December 2020: $8.6 million).
Should management determine that some of these input tax credits are not recoverable in future, the Group will reclassify
those amounts to the cost base of related assets, or recognise an expense in the profit or loss in the period the determination
is made. The outstanding balance for input tax credit is classified as non-current due to uncertainties on the timing of receipts.
c)
Trade and other payables
Current
Trade payables and accruals
Other payables
Total current trade and other payables
Non-current
Trade payables and accruals
Total non-current trade and other payables
2021
2020
US$’000
US$’000
16,570
1,492
18,062
1,496
1,496
5,448
1,140
6,588
985
985
(i) Risk exposure
Trade payables are non-interest bearing and are normally settled on repayment terms between 7 and 30 days. Information
about the Group’s exposure to foreign exchange risk is provided in note 12.
(ii) Fair value measurement
Due to the short-term nature of these payables, their carrying amount is assumed to approximate their fair value.
d) Leases
This note provides information for leases where the Group is a leasee.
(i) Amounts recognised in the balance sheet
The balance sheet shows the following amounts relating to leases:
Right of use assets
Properties
Equipment
Lease liabilities
Current
Non-current
2021
2020
US$’000
US$’000
9,666
1,217
10,883
3,229
12,980
16,209
11,163
2,199
13,362
1,417
15,354
16,771
The lease liability is measured at the present value of the fixed and variable lease payments, net of cash lease incentives, that
are not paid at the balance date. Lease payments are apportioned between finance charges and a reduction of the lease
liability using the incremental borrowing rate implicit in the lease where available, or an assumed Group incremental borrowing
rate, to achieve a constant rate of interest on the remaining balance of the liability.
63
(ii) Amounts recognised in the statement of profit or loss
The statement of profit or loss shows the following amounts relating to leases:
Depreciation charge of Right of use assets
Properties
Equipment
Interest expense (included in finance cost)
Expense relating to short-term leases (included in cost of goods sold and administrative
expenses)
Expense relating to leases of low-value assets that are not shown above as short-term
leases (included in administrative expenses)
The total cash outflow for leases in 2021 was $1.8 million (2020: $2.3 million).
e) Borrowings
Initial face value of Convertible Notes(1) issued
Capitalised to principal outstanding
- Interest expense
- Transaction costs
Deferred transaction costs
Exchange differences
Total Convertible Notes
2021
2020
US$’000
US$’000
1,519
982
2,501
1,104
45
4
2021
US$’000
60,143
8,827
1,203
(782)
461
1,574
982
2,556
1,178
44
3
2020
US$’000
39,093
4,234
782
(584)
3,943
69,852
47,468
(1) Syrah Resources Limited issued a 5-year unsecured A$55.8 million Convertible Note Series 1 in October 2019 and A$28.0 million Convertible Note
Series 3 in June 2021 to AustralianSuper Pty Ltd as Trustee for AustralianSuper. Under the terms of the Convertible Notes, the Group elected to
accrue interest on the principal outstanding at a rate of 8% per annum, capitalised quarterly in arrears. Syrah Resources Limited also incurred total
of A$1.7 million transaction costs related to the issuance of the Convertible Notes which were capitalised when the Notes were issued and are
amortised to Finance Expense over the term of the Convertible Notes.
NOTE 9. NON-FINANCIAL ASSETS AND NON-FINANCIAL LIABILITIES
a)
Inventories
Stores and materials
Ore stockpile
Work in progress
Finished goods
2021
US$’000
12,967
241
23
7,154
20,385
2020
US$’000
14,149
-
-
1,588
15,737
Inventory write-down
Write-down of inventories to net realisable value totaled $1.3 million in 2021 (2020: $2.6 million) and were recognised as an
expense in the income statement.
64
SYRAH RESOURCES > ANNUAL REPORT 2021
b) Mining assets
Exploration and evaluation
Mine properties and development
Total mining assets
Movements in Mining Assets are set out below:
At 1 January 2021
Cost
Accumulated amortisation and impairment
Net book amount
For the financial year ended 31 December 2021
Balance at beginning of the year
Additions
Change in rehabilitation estimate
Amortisation expenses
Exchange differences
Balance at end of the year
For the financial year ended 31 December 2020
Balance at beginning of the year
Additions
Change in rehabilitation estimate
Amortisation expenses
Exchange differences
Balance at end of the year
2021
US$’000
1,308
131,456
132,764
2020
US$’000
1,311
132,897
134,208
EXPLORATION AND
EVALUATION
MINE PROPERTIES
AND DEVELOPMENT
TOTAL
US$’000
US$’000
US$’000
1,311
-
1,311
136,484
137,795
(3,587)
(3,587)
132,897
134,208
1,311
132,897
134,208
-
-
-
(3)
1,308
341
1,386
341
1,386
(3,168)
(3,168)
-
(3)
131,456
132,764
1,306
119,425
120,731
-
-
-
5
13,459
3,600
(3,587)
-
13,459
3,600
(3,587)
5
1,311
132,897
134,208
Exploration and evaluation
The balance of Exploration and Evaluation relates to the Vanadium project at Balama and continues to be carried forward
in accordance with the exploration and evaluation accounting policy. The ultimate recoupment of exploration and evaluation
expenditure is dependent upon successful development and commercial exploitation or alternatively the sale of the respective
interests at an amount at least equal to book value.
Mine Properties and Development
Mine Properties and Development mainly relate to the development, construction and pre-commercial production costs of
Balama in Mozambique.
65
c)
Property, plant and equipment
LAND AND
BUILDINGS
PLANT AND
EQUIPMENT
COMPUTER
EQUIPMENT
ASSETS UNDER
CONSTRUCTION
RIGHT
OF USE
ASSETS
TOTAL
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
924
(447)
477
477
23
(2)
(131)
(1)
366
887
(521)
366
905
(307)
598
598
7
-
(129)
1
477
924
(447)
477
67,969
18,680
221,977
-
(5,318)
(57,533)
67,969
13,362
164,444
67,969
17,562
-
-
13,362
164,444
25
-
24,098
(21)
(2,501)
(7,364)
(632)
(3)
(637)
84,899
10,883
180,520
84,899
17,952
244,391
-
(7,069)
(63,871)
84,899
10,883
180,520
59,533
19,599
211,109
-
(2,895)
(50,438)
59,533
16,704
160,671
59,533
16,704
160,671
7,512
-
-
179
(975)
11,009
(975)
(2,556)
(7,198)
924
10
937
67,969
13,362
164,444
67,969
18,680
221,977
-
(5,318)
(57,533)
67,969
13,362
164,444
At 1 January 2021
Cost
Accumulated depreciation and impairment
Net book amount
15,024
(5,390)
9,634
119,380
(46,378)
73,002
For the financial year ended 31 December 2021
Balance at beginning of period
9,634
Additions
Disposals (at net book value)
Depreciation expense
Exchange differences
Balance at end of the year
At 31 December 2021
Cost
Accumulated depreciation and impairment
Net book amount
At 1 January 2020
Cost
Accumulated depreciation and impairment
Net book amount
For the financial year ended 31 December 2020
Balance at beginning of period
Additions
Lease modifications (at net book value)
Depreciation expense
Exchange differences
73,002
6,488
(19)
-
-
(375)
(4,357)
-
(1)
9,259
75,113
15,024
(5,765)
9,259
125,629
(50,516)
75,113
14,396
(5,084)
9,312
116,676
(42,152)
74,524
9,312
628
-
(306)
-
74,524
2,683
-
(4,207)
2
Balance at the end of the year
9,634
73,002
At 31 December 2020
Cost
Accumulated depreciation and impairment
Net book amount
15,024
(5,390)
9,634
119,380
(46,378)
73,002
66
SYRAH RESOURCES > ANNUAL REPORT 2021
Assets Under Construction
Assets Under Construction at 31 December 2021 consists of capitalised project and product development costs
for the downstream Vidalia project of $79.0 million (2020: $60.7 million) and capital costs for Balama of $5.9 million
(2020: $7.3 million).
Significant estimates and judgements
Impairment of non-financial assets
The Group performs an impairment assessment where there is an indication of possible impairment. Impairment assessments
are performed using information from internal sources as well as external sources, including industry analysts and analysis
performed by external parties.
The recoverable amount of each cash generating unit is considered to be the higher of fair value less costs of disposal or
value-in-use. Where an impairment assessment is required, the Group undertakes cash flow calculations based on a number
of critical estimates, assumptions and forward estimates including commodity price expectations, foreign exchange rates,
discount rates, reserves and resources and expectations regarding future development costs as well as production, sales and
operating costs which are subject to risk and uncertainty.
Variations to expected future cash flows, and timing thereof, could result in significant changes to the impairment test results,
which in turn could impact future financial results.
No indicator of impairment was identified as at 31 December 2021.
Estimation of useful lives of assets
The Group determines the estimated useful lives and related depreciation and amortisation charges for its property, plant and
equipment and finite life intangible assets. The useful lives could change significantly as a result of change in Ore Reserves
and Mineral Resources, technical innovations or some other event. The depreciation and amortisation charge will increase
where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets are abandoned or
sold and written off or written down.
Determination of Mineral Resources and Ore Reserves
Mineral Resources and Ore Reserves are based on information compiled by a Competent Person as defined in accordance
with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves of December 2012
(the JORC 2012 code). There are numerous uncertainties inherent in estimating ore reserves and assumptions that are valid
at the time of estimation may change significantly when new information becomes available. Changes in forecast prices of
commodities, exchange rates, production costs or recovery rates may change the economic status of ore reserves and may,
ultimately, result in the reserves being restated. Such changes in reserves could impact on depreciation and amortisation
rates, asset carrying values and provisions for decommissioning and restoration.
Impairment of exploration and evaluation expenditure
The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors, including
whether the Group decides to develop and exploit an area of interest or, if not, whether it recovers the related exploration and
evaluation asset through sale.
67
d) Deferred tax balances
The balance comprises temporary differences attributable to:
Deferred tax assets
Taxation losses(1)
Mining assets
Total deferred tax assets
Deferred tax liabilities
Non-financial assets
Total deferred tax liabilities
2021
2020
US$’000
US$’000
2,302
23,659
25,961
(3,622)
(3,622)
2,302
24,682
26,984
(1,938)
(1,938)
(1) Relates to tax losses generated by Twigg in Mozambique, which have a 5 year utilisation requirement under Mozambique tax laws.
Movements in deferred tax balances - 31 December 2021
Deferred tax assets
Taxation losses
Mining assets
Total deferred tax assets
Deferred tax liabilities
Non-financial assets
Total deferred tax liabilities
BALANCE AT
1 JANUARY 2021
(CHARGED) /
CREDITED TO
PROFIT OR LOSS
BALANCE AT
31 DECEMBER 2021
US$'000
US$'000
US$'000
2,302
24,682
26,984
(1,938)
(1,938)
-
(1,023)
(1,023)
(1,684)
(1,684)
2.302
23,659
25,961
(3,622)
(3,622)
Movements in deferred tax balances - 31 December 2020
Deferred tax assets
Taxation losses
Mining assets
Total deferred tax assets
Deferred tax liabilities
Non-financial assets
Total deferred tax liabilities
BALANCE AT
1 JANUARY 2020
(CHARGED) /
CREDITED TO
PROFIT OR LOSS
BALANCE AT
31 DECEMBER 2020
US$'000
US$'000
US$'000
2,302
25,451
27,753
-
-
-
(769)
(769)
(1,938)
(1,938)
2,302
24,682
26,984
(1,938)
(1,938)
The Group’s accounting policy for taxation requires management judgment in relation to the application of income tax
legislation. There are many transactions and calculations undertaken during the ordinary course of business where the ultimate
tax determination is uncertain. The Group recognises liabilities for tax, and if applicable taxation investigation or audit issues,
based on whether tax will be due and payable. Where the taxation outcome of such matters is different from the amount initially
recorded, such difference will impact the current and deferred tax positions in the period in which the assessment is made.
Judgement is required in assessing whether deferred tax assets and liabilities are recognised on the balance sheet. Deferred
tax assets, including those arising from temporary differences, are recognised only when it is considered more likely than not
that they will be recovered, which is dependent upon the generation of future assessable income of a nature and of an amount
sufficient to enable the benefits to be utilised. In addition, the utilisation of taxation losses also depends on the ability of the tax
consolidated entities to satisfy certain tests at the time the losses are recouped.
68
SYRAH RESOURCES > ANNUAL REPORT 2021
For the year ended 31 December 2021, Syrah has assessed whether the carried forward tax losses generating the deferred
tax assets currently recognised on balance sheet will be utilised within the time periods required under Mozambique tax law.
Syrah has determined that carried forward tax losses currently recognised on balance sheet will be utilised. However Syrah
has determined that it will not recognise further tax losses on the balance sheet at this point in time.
e) Provisions
Current
Employee benefits
Other provisions
Non-current
Employee benefits
Decommissioning and restoration
Other provisions
Movements in decommissioning and restoration provision
Balance at beginning of the year
Additional provisions:
- Capitalised to Mine Properties and Development (note 9b)
- Unwind of discount
Balance at end of the year
2021
2020
US$’000
US$’000
714
1,459
2,173
102
15,004
9,854
24,960
2021
US$’000
13,590
1,386
28
15,004
522
319
841
79
13,590
10,890
24,559
2020
US$’000
9,957
3,600
33
13,590
Employee benefits
Employee benefits provisions relate to employee entitlements such as annual leave and long service leave.
Other provisions
Other provisions relating to obligation to incur expenditure on Balama community development initiatives. The provision is
capitalised into Mine Properties and Development as shown in Note 9(b).
Significant Estimates and Judgements
The provisions are measured at the present value of management’s best estimate of the expenditure required to settle the
present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate
that reflects current market assessment of the time value of the money. When discounting is used, the increase in the provision
due to the passage of time is recognised as a finance cost.
Decommissioning and restoration
Decommissioning, dismantling of property, plant and equipment and restoration are normal for the mining industry, and
the majority of this expenditure will be incurred at the end of a mine’s life. In determining an appropriate level of provision,
consideration is given to the expected future costs to be incurred, the timing of these expected future costs (largely
dependent on the life of the mine), the estimated future level of inflation, and time value of money.
The ultimate cost of decommissioning and restoration is uncertain and costs can vary in response to many factors including
progression of construction/development activities, changes to the relevant legal requirements, the emergence of new
restoration techniques or industry experience at other mine sites. The expected timing of expenditure can also change, for
example in response to changes in reserves or to production rates.
Changes to any of the estimates could result in significant changes to the level of provisioning required, which would in turn
impact future financial results. These estimates are reviewed annually and adjusted where necessary to ensure that the most
up to date data is used.
The provision is the present value of estimated future expenditure to restore the current level of disturbance. These costs have
been capitalised as part of Mine Properties and Development and will be amortised over the estimated life of the mine.
69
Additional decommissioning and restoration provisions required as a result of continuing activities or future operations will be
recognised in the future as and when new areas are disturbed, or new structures built, and the obligation to remediate the
affected areas arises.
NOTE 10. EQUITY
a)
Issued capital
Issued and fully paid ordinary shares
(i) Movements in ordinary share capital
31 December 2021
Balance at beginning of the year
Issue of new shares:
- Share purchase plan
- Equity-settled remuneration
Transfers from share-based payment reserve(2)
Capital raising costs
Balance at end of the year
31 December 2020
Balance at beginning of the year
Issue of new shares:
- Institutional placement
- Equity-settled remuneration
Transfers from share-based payment reserve(2)
Capital raising costs
Balance at end of the year
2021
2020
SHARES
498,734,723
SHARES
477,087,059
498,734,723
477,087,059
2021
US$’000
619,285
619,285
2020
US$’000
604,920
604,920
NUMBER OF
SHARES
WEIGHTED
AVERAGE ISSUE
PRICE (A$)
TOTAL
US$’000
477,087,059
-
604,920
20,004,155
1,643,509
-
-
498,734,723
413,493,062
62,228,746
1,365,251
-
-
477,087,059
A$0.90
-(1)
-
-
-
-
A$0.90
-(1)
-
-
-
13,733
-
877
(245)
619,285
563,694
42,363
-
417
(1,554)
604,920
(1) The cost associated with issuance of these shares is included in the transfers from share-based payments reserve line item.
(2) Represents transfers from the share-based payment reserves on issuance of shares.
(ii) Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds of winding up of the Company in proportion to
the number of and amounts paid on the shares held.
Ordinary shares entitle their holder to one vote per share, either in person or by proxy, at a meeting of the Company. Ordinary
shares have no par value and the Company does not have a limited amount of authorised share capital.
(iii) Share options and share rights
The Company has a share-based payment scheme under which options and share rights have been granted to Non-Executive
Directors, Executives and selected Senior Employees. Information in relation to the Group’s Long Term Incentive Plan and
Share Option Plan Rules including details of options and share rights issued and exercised during the financial year and
outstanding at the end of the financial year are set out in note 16.
There are no voting or dividend rights attached to share options and share rights.
70
SYRAH RESOURCES > ANNUAL REPORT 2021
(iv) Share buy-back
There is no current on-market share buy-back.
(v) Capital risk management
The consolidated entity’s objectives when managing capital are to safeguard its ability to continue as a going concern, so
that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to
reduce the cost of capital.
In order to maintain or adjust the capital structure, the consolidated entity may return capital to shareholders, or issue new
shares.
b) Reserves
Foreign currency translation reserve
Share-based payments reserve
(i) Movements in reserves
Movements in each class of reserve are set out below:
31 December 2021
Balance at beginning of the year
Foreign currency translation
Share-based payments
Issuance of 5% non-controlling interest
Issuance of shares
Transfer of expired/lapsed options and performance rights
Balance at end of the year
31 December 2020
Balance at beginning of the year
Foreign currency translation
Share-based payments
Issuance of shares
Transfer of expired/lapsed options and performance rights
Balance at end of the year
2021
US$’000
(18,026)
4,018
(14,008)
2020
US$’000
(18,380)
10,386
(7,994)
FOREIGN
CURRENCY
RESERVE
SHARE-BASED
PAYMENTS
RESERVE
US$’000
US$’000
(18,380)
354
-
-
-
-
(18,026)
(17,563)
(817)
-
-
-
(18,380)
10,386
-
2,750
(7,201)
(877)
(1,040)
4,018
10,226
-
1,809
(417)
(1,232)
10,386
TOTAL
US$’000
(7,994)
354
2,750
(7,201)
(877)
(1,040)
(14,008)
(7,337)
(817)
1,809
(417)
(1,232)
(7,994)
(ii) Nature and purpose of reserves
Foreign currency reserve
Exchange differences arising on translation of foreign controlled entities are recognised in other comprehensive income and
accumulated in a separate reserve within equity. The cumulative amount is reclassified to the profit and loss when the net
investment is disposed of.
The Group assesses the functional currency of each entity in the consolidated group when there are changes in
circumstances that could result in a change in the currency that predominantly influences the economic results of each
respective entity. With effect from 1 January 2017, the functional currency of Twigg was changed from Mozambique Meticals
(MZN) to the United States Dollar (USD) on the basis that the USD is the currency that predominately influences the revenues,
expenditures and financing activities of this entity going forward.
71
Share-based payments reserve
The share-based payments reserve is used to recognise the fair value of equity benefits and equity-settled contractual
obligations issued by the Company (refer note 16(b) for further details).
c) Non-controlling interest
In accordance with the obligations imposed on Group’s subsidiary Twigg Exploration and Mining Limitada under the Mining
Agreement with the Mozambique Government, Syrah completed the transfer of 5% quota holding in Twigg Exploration and
Mining Limitada to Empresa Mocambicana De Exploracao Mineira,S.A (“EMEM”).
The transaction was accounted for under AASB 2 Share-based Payment and measured at fair value when the agreement
was entered into in 2018. In 2021, the shares were transferred to EMEM at which point the share-based payment reserve was
transferred to non-controlling interest.
NOTE 11. RECONCILIATION OF LOSS AFTER INCOME TAX TO NET CASH
OUTFLOW FROM OPERATING ACTIVITIES
Loss after income tax expense for the year
Adjustments for:
Depreciation and amortisation expense
Gain/(loss) on fixed asset disposal
Share-based payments
Revaluation of asset
Interest expense
Net foreign exchange (gain)/loss
Changes in operating assets and liabilities:
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Increase/(decrease) in provisions
(Increase)/decrease in inventory
(Increase)/decrease in deferred tax assets
Increase/(decrease) in deferred tax liabilities
Net cash outflow from operating activities
2021
US$’000
(56,870)
2020
US$’000
(60,870)
10,630
10,003
21
2,770
(117)
6,345
(2,868)
(2,968)
9,790
139
(4,648)
1,024
1,684
-
1,809
(137)
4,733
2,036
9,261
(4,324)
(420)
2,286
769
1,938
(35,068)
(32,916)
72
SYRAH RESOURCES > ANNUAL REPORT 2021
RISK
This section of the notes discusses the group’s exposure to various risk and shows how
these could affect the group’s financial position and performance.
NOTE RISK
12
FINANCIAL RISK MANAGEMENT
PAGE
74
73
NOTE 12. FINANCIAL RISK MANAGEMENT
The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and price
risk), credit risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial
markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Group uses different
methods to measure different types of risks to which it is exposed. These methods include sensitivity analysis in the case of
interest rate risk, foreign exchange risk and aging analysis for credit risk.
The Group continues to assess the impacts on its business broadly, and Financial Risk Management specifically, from
COVID-19 and geopolitical events including conflicts. These impacts include demand for its products, supply chain and people
movement disruptions, and financial market volatility (including currency markets). Syrah is particularly focused on managing
its Liquidity Risk and assessing a range of production and demand scenarios over the next 12 months.
Financial risk management is carried out by the Audit and Risk Committee under guidelines established by the Board. The
Group holds the following financial instruments:
Financial Assets
Cash and cash equivalents
Trade and other receivables
Available-for-sale financial assets
Financial Liabilities
Trade and other payables
Borrowings
Lease liabilities
a) Market risk
2021
2020
US$’000
US$’000
52,914
15,820
395
69,129
19,558
69,852
16,209
105,619
74,992
15,185
299
90,476
7,573
47,468
16,771
71,812
Foreign exchange risk
(i)
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily
with respect to the United States Dollar (USD), Mozambican Meticals (MZN) and Australian Dollars (AUD).
Foreign exchange risk arises from recognised financial assets and financial liabilities denominated in a currency that is not the
entity’s functional currency and the impact of exchange rate movements on net investment in foreign subsidiaries. The risk is
measured using sensitivity analysis and cash flow forecasting.
At this time the Group does not manage its prospective foreign exchange risk with currency hedges. The Group’s exposure to
foreign currency risk at the reporting date, expressed in USD, was as follows:
Assets
- US Dollars(1)
- Mozambique Meticals
- Other
Liabilities
- US Dollars
- Mozambique Meticals
- South African Rand
- Australian Dollars
Net surplus/(deficit) position
2021
2020
US$’000
US$’000
26,992
2,957
58
30,007
392
5,764
329
745
7,230
22,777
54,604
1,541
33
56,178
352
975
187
103
1,617
54,561
(1) Relates to US Dollar denominated financial assets and liabilities held by the parent entity, Syrah Resources Limited, which has an Australian dollar
functional currency.
74
SYRAH RESOURCES > ANNUAL REPORT 2021
Group sensitivity
Based on the financial instruments held at 31 December 2021 and the net investments in foreign subsidiaries, had the USD
strengthened/weakened by 5% against the above currencies with all other variables held constant, the impact on consolidated
results for the financial year would have changed as follow:
USD +5%
USD -5%
IMPACT ON LOSS AFTER TAX
(HIGHER)/ LOWER
IMPACT ON
EQUITY HIGHER/ (LOWER)
2021
US$'000
(1,115)
1,232
2020
US$'000
(2,601)
2,875
2021
US$'000
(1,597)
1,765
2020
US$'000
400
(442)
(ii) Cash flow and fair value interest rate risk
The Group’s main interest rate risk relates to interest income on Cash and Cash Equivalents. The entity does not hold any
financial assets or liabilities whose fair value would be impacted by interest rates. A reasonably possible movement in interest
rates would not have a material impact on the consolidated results or equity for the year.
Under the terms of the Convertible Notes, the Group can elect each quarter to capitalise interest and add the amount to the
Principal Outstanding at a rate of 8.0% or pay interest in cash at a rate of 7.5%. These interest rates are fixed for the term of
the Convertible Notes.
b) Credit risk
Credit risk is managed on a Group basis. Credit risk arises from Cash and Cash Equivalents and deposits with banks and
financial institutions as well as amounts owing from the sale of graphite to customers.
The Group limits its counterparty credit risk on liquid funds by dealing only with reputable global banks or financial institutions.
The Group’s cash reserves are also spread amongst financial institutions to reduce concentration of credit risk.
The Group has policies in place to manage exposures to customers from the sale of graphite including credit coverage by the
issuance of letters of credit from high credit quality financial institutions and limits on credit exposures to individual customers
where there is no letter of credit by setting maximum credit exposures for individual customers and not releasing bills of lading
until receipt of the amount outstanding. Credit exposure limits are approved by the Audit and Risk Committee.
As at 31 December 2021, the trade receivables balance was US$4.3 million (2020: US$0.6 million) which are mostly covered
within the maximum credit exposures for individual customers and by the non-release of the bill of lading pending the receipt
of the amount owing. There were only $0.6 million of trade receivables overdue as at 31 December 2021 which were fully
recovered in early 2022.
Liquidity risk
c)
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding and
the ability to close out market positions. The Group manages liquidity risk by continuously monitoring forecast and actual cash
flows and matching the maturity profiles of financial assets and liabilities.
The Group has announced commercial production of natural graphite products from Balama but is not yet cashflow positive.
The Company may require additional financing, in addition to cash reserves, to meet operating and capital expenditure
requirements for Balama, general and administrative expenditures and Vidalia Facility activities.
Maturities of Financial Liabilities
The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period as at
the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash
flows.
75
AS AT
31 DECEMBER 2021
LESS THAN
6 MONTHS
BETWEEN
6-12
MONTHS
BETWEEN
1-2 YEARS
BETWEEN
2-5 YEARS
OVER
5 YEARS
TOTAL CON-
TRACTUAL
CASH
FLOWS
CARRYING
AMOUNT
LIABILITIES
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
Non-derivatives
Non-interest bearing
- Current Trade and
other payables
Interest bearing
- Non current Trade and
other payables
- Lease liabilities
- Non-current
borrowings(1)
Total non-derivative
liabilities
18,062
-
-
-
-
-
-
-
-
18,062
18,062
4,640
4,640
1,496
1,190
1,723
2,447
6,484
8,212
20,055
16,209
-
-
-
88,360
-
88,360
69,852
19,252
1,723
2,447
94,844
12,852
131,117
105,619
(1) Non-current borrowings represent the Convertible Notes issued by the Group. The Convertible Notes have a 5 year term however the noteholder may
elect to convert into fully paid ordinary shares of Syrah Resources Limited any time after 30 months from Date of Completion and prior to maturity or
earlier if: a third party makes a takeover offer for all the Shares in the Company; or, the Company announces the execution of a scheme implementation
agreement in respect of acquisition of all the Shares in the Company by scheme of arrangement. In an Event of Default the Noteholder may give notice
to the Company to demand payment of the Principal Outstanding on the Convertible Notes by way of redemption of the Convertible Notes, in which
case the Principal Outstanding shall become immediately due and payable; or, elect to Convert the Convertible Notes into Shares.
AS AT
31 DECEMBER 2020
LESS THAN
6 MONTHS
BETWEEN
6-12
MONTHS
BETWEEN
1-2 YEARS
BETWEEN
2-5 YEARS
OVER
5 YEARS
TOTAL CON-
TRACTUAL
CASH
FLOWS
CARRYING
AMOUNT
LIABILITIES
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
Non-derivatives
Non-interest bearing
- Current Trade and other
payables
Interest bearing
- Non current trade and
other payables
- Lease liabilities
- Non-current
borrowings(1)
6,588
-
-
-
-
-
-
-
-
6,588
6,588
1,630
1,630
985
691
1,046
3,349
6,654
10,481
22,221
16,771
-
-
-
65,143
-
65,143
47,468
7,279
1,046
3,349
71,797
12,111
95,582
71,812
(1) Non-current borrowings represent the Convertible Note issued by the Group. The Convertible Note have a 5 year term however the noteholder may elect
to convert into fully paid ordinary shares of Syrah Resources Limited any time after 30 months from Date of Completion and prior to maturity or earlier if:
a third party makes a takeover offer for all the Shares in the Company; or, the Company announces the execution of a scheme implementation agreement
in respect of acquisition of all the Shares in the Company by scheme of arrangement. In an Event of Default the Noteholder may give notice to the
Company to demand payment of the Principal Outstanding on the Convertible Note by way of redemption of the Convertible Note, in which case the
Principal Outstanding shall become immediately due and payable; or, elect to Convert the Convertible Note into Shares.
d) Capital risk management
When managing capital, the Group’s objective is to safeguard the ability to continue as a going concern so that the Group
continues to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to
reduce the cost of capital.
Management is constantly reviewing and adjusting, where necessary, the capital structure. This involves the use of corporate
forecasting models which enable analysis of the Group’s financial position including cash flow forecasts to determine future
capital management requirements. To ensure sufficient funding, a range of assumptions are modelled to determine sensitivities
of the Group’s financial position and capital requirements under different circumstances and/or potential outcomes.
76
SYRAH RESOURCES > ANNUAL REPORT 2021
UNRECOGNISED ITEMS
This section of the notes provides information about items that are not recognised in the
financial statements as they do not (yet) satisfy the recognition criteria.
NOTE UNRECOGNISED ITEMS
13
14
COMMITMENTS, CONTINGENCIES AND GUARANTEES
EVENTS OCCURRING AFTER THE REPORTING PERIOD
PAGE
78
78
77
NOTE 13. COMMITMENTS, CONTINGENCIES AND GUARANTEES
a) Capital expenditure commitments
Significant capital expenditure contracted for at the end of the reporting period but not recognised as liabilities is as follows:
Property, plant and equipment
Total capital commitments
2021
US$’000
20,598
20,598
2020
US$’000
1,278
1,278
The above capital expenditure commitments are in relation to the development and construction of Balama in Mozambique
and the development of the downstream Vidalia project.
b) Contingencies
The Group did not have any contingent assets or liabilities at the end of the current and previous financial years.
c) Guarantees
Bank guarantees from Twigg Exploration and Mining Limitada which unconditionally and irrevocable guarantee in favor of the
Ministry of Minerals Resources and Energy (MIREME) in Mozambique, the due and punctual payment of amounts up to a
maximum amount of MZN 536 million (US$8.4 million) as at 31 December 2021 (2020: US$6.2 million) are required in relation to
the rehabilitation or removal of project infrastructure as per the mine closure plan for Balama. The Company is in the process of
renewing the bank guarantees.
Parent company guarantee is required to be provided by Syrah Resources Limited in favour of the Government of Mozambique,
which unconditionally and irrevocably guarantees amounts up to a maximum of US$22.5 million to cover any loss or damage or
other costs arising out of, or associated with, a breach of the Mining Concession held by Twigg. This guarantee was required to
remain in place for a period of two years after the signing of the Mining Agreement. This guarantee expired prior to end of this
reporting period, although a formal release of the guarantee by the Government of Mozambique has not yet been received.
NOTE 14. EVENTS OCCURRING AFTER THE REPORTING PERIOD
Following Syrah’s announcement in December 2021 regarding the execution of an offtake agreement to supply AAM from
Vidalia, on 7 February 2022, Syrah announced that the final investment decision had been taken for Vidalia’s initial expansion to
11.25ktpa AAM production capacity. This decision advances Syrah’s strategy to become a vertically integrated natural graphite
AAM supplier for USA and European battery supply chain participants and OEM customers. At the same time, Syrah announced
a fully underwritten institutional placement (Placement) and a 1 for 5.9 pro rata accelerated non-renounceable entitlement offer
(Entitlement Offer) to raise a $250 million (US$178 million). On 9 February 2022, Syrah announced the successful completion of
the Placement and the Institutional Entitlement Offer raising approximately A$125 million (US$89 million) and A$68 million (US$47
million) respectively. On 3 March 2022, Syrah announced the completion of the Retail Entitlement Offer. Valid applications from
eligible retail shareholders for new shares under the Retail Entitlement Offer, and the issue of new shares to sub-underwriters,
representing entitlements that were not taken up by eligible retail shareholders under the Retail Entitlement Offer and entitlements
of ineligible foreign retail shareholders, raised approximately A$57 million (US$40 million).
No other events have occurred subsequent to 31 December 2021 that has significantly affected, or may significantly affect the
Group’s operations, the results of those operations, or the state of affairs in future financial periods.
78
SYRAH RESOURCES > ANNUAL REPORT 2021
ADDITIONAL OTHER INFORMATION
This section of the notes includes additional other information that must be disclosed
to comply with the accounting standards and other pronouncements, but that is not
immediately related to individual line items in the financial statements.
NOTE ADDITIONAL OTHER INFORMATION
PAGE
15
16
17
18
19
20
21
22
RELATED PARTY TRANSACTIONS
SHARE-BASED PAYMENTS
REMUNERATION OF AUDITORS
EARNINGS PER SHARE
PARENT ENTITY FINANCIAL INFORMATION
SUBSIDIARIES
DEED OF CROSS GUARANTEE
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
80
81
84
84
85
86
86
89
79
NOTE 15. RELATED PARTY TRANSACTIONS
a) Ultimate parent
Syrah Resources Limited is the ultimate holding company of the Group.
b) Subsidiaries
Interests in subsidiaries are set out in note 20.
c) Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Other benefits
Share-based payments
2021
US$
1,502,317
77,320
9,154
1,377,155
2,965,946
2020
US$
1,487,662
91,952
251,801
1,278,449
3,109,864
Detailed remuneration disclosures are provided in the Remuneration Report on pages 23 to 48 of the Annual Report.
d) Transactions with related parties
Transactions with related parties are set out below:
Purchases of goods and services
Legal services provided by Sal & Caldeira Advogados, Lda(1)
77,084
79,989
(1) Represents legal services provided to the Company by Sal & Caldeira Advogados, Ltd in Mozambique. J Caldeira is a Non-Executive Director of
the Company and is a Senior Partner at Sal & Caldeira Advogados, Lda.
e) Outstanding balances arising from purchases of goods and services
2021
US$
2020
US$
Trade and other payables
Legal services provided by Sal & Caldeira Advogados, Lda(1)
2021
US$
11,535
2020
US$
-
(1) Represents outstanding balances arising of legal services provided to the Company by Sal & Caldeira Advogados, Ltd in Mozambique. J Caldeira
is a Non-Executive Director of the Company and is a Senior Partner at Sal & Caldeira Advogados, Lda.
f) Loans to/from related parties
There are no loans made to or from related entities by the Group.
80
SYRAH RESOURCES > ANNUAL REPORT 2021
NOTE 16. SHARE-BASED PAYMENTS
Types of share based payment plans
a)
The Group has a Non-Executive Director Share Rights Plan, Equity Incentive Plan, Long-Term Incentive Plan and a Share
Option Plan in existence.
These share-based payment plans form an important part of a comprehensive remuneration strategy for the Company’s
employees and Directors and align their interests with those of shareholders by linking rewards to the long-term success of
the Company and its financial performance.
(i) Non-Executive Director Share Rights Plan (“NEDSP”)
The NEDSP was established and approved by shareholders at the Annual General Meeting on 22 May 2020. The plan is
intended to support NEDs to develop a meaningful shareholding in the Company and as a means of aligning the interests of
NEDs and shareholders generally through the diversion of current and future cash remuneration to equity. In addition, it will
assist the company in implementing its cost reduction strategies and maintain its cash reserves.
The key element of the NEDSP for NEDs is that it provides the opportunity for NEDs to sacrifice part or all of their cash fees
in favour of Equity Securities under this plan to build their shareholding in the Company. The introduction of the NEDSP is
also intended to remunerate individual NEDs for any material additional efforts that individual NEDs are required to deliver in
progressing the Company’s goals.
The NEDSP does not attach any performance measures to vesting. This is in line with best practice governance standards
which recommend that non-executive directors generally should not receive equity with performance hurdles attached as it
may lead to bias in decision-making and compromise their objectivity and in turn their independence.
(ii) Equity Incentive Plan (“EIP”)
The EIP was established and approved by shareholders at an Annual General Meeting held on 17 May 2018, and applies
to all shares, performance rights and options offered for grant from 17 May 2018 onwards. Under the EIP, the Company
may issue performance rights, options and shares to directors and employees of the Company (or a subsidiary). The grant
of performance rights, options and shares is subject to such conditions (if any) as determined by the Board of Directors.
Any performance rights, options and shares granted under the EIP may be subject to such vesting conditions (if any) as
determined by the Board of Directors.
(iii) Long Term Incentive Plan (“LTIP”)
The LTIP was established and approved by shareholders at an Annual General Meeting held on 13 November 2015 and
enables the Company, at the discretion of the Board of Directors, to offer employees and Directors a number of equity related
interests, including options, performance rights and shares. No further options, performance rights or shares will be issued
under this plan.
Measurement
The consolidated entity measures the cost of equity-settled transactions with employees by reference to the fair value of
the equity instruments at the date at which they are granted. The fair value of options granted is determined by using the
Black-Scholes model considering the terms and conditions upon which the instruments were granted and based upon the
assumptions detailed above. The accounting estimates and assumptions relating to equity-settled share-based payments
would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact
profit or loss and equity.
81
b) Summary and movement of options on issue
The table below summarises the number, weighted average exercise prices and movements in Options on issue during the
financial year:
2021
2020
WEIGHTED
AVERAGE
EXERCISE PRICE
PER SHARE
OPTION
NUMBER OF
OPTIONS
WEIGHTED
AVERAGE
EXERCISE PRICE
PER SHARE
OPTION
NUMBER OF
OPTIONS
Balance at beginning of the year
A$ 2.61
1,600,000
A$3.25
2,600,000
Granted during the year
Exercised during the year (1)
Expired during the year
Balance at end of the year
Vested and exercisable at end of year
-
-
A$ 3.75
A$ 0.70(2)
A$ 0.70(2)
-
-
(1,000,000)
600,000
600,000
-
-
A$4.27
A$2.61
A$2.61
-
-
(1,000,000)
1,600,000
1,600,000
(1) There were no options exercised during the year ended 31 December 2021 and 2020.
(2) Effective from 17 March 2022, the exercise price of these options were reduced by A$0.03 (3 cents) per options to A$0.67 in accordance with the
terms of the Employee Incentive Plan adopted on 17 May 2018 and refreshed on 21 May 2021, ASX Listing Rules 3.11.2 and 6.22 as a result of the
issuance of shares from a 1 for 5.9 pro-rata accelerated non-renounceable entitlement offer.
Each option is convertible into one ordinary share. There are no voting or dividend rights attached to the options. Voting and
dividend rights will attach to the ordinary shares when the options have been exercised.
The outstanding balance of options as at 31 December 2021 is represented by:
Options issued as part of the EIP
2021
2020
NUMBER OF
OPTIONS
600,000
EXERCISE PRICE
RANGE
A$0.70(1)
NUMBER OF
EXERCISE PRICE
RANGE
OPTIONS
1,600,000 A$0.70(1) to A$4.34
Share options outstanding at the end of the financial year have the following expiry dates and exercise prices:
GRANT DATE
25-Jun-2018
27-May-2019
07-Oct-2019
Total Options
EXPIRY DATE
25-Jun-2021
16-Jul-2021
07-Oct-2022
EXERCISE PRICE
A$4.34
A$2.86
A$0.70(1)
2021
NUMBER
-
-
600,000
600,000
2020
NUMBER
600,000
400,000
600,000
1,600,000
Weighted average remaining contractual life of options outstanding at the end of the year
0.77 year
0.98 year
(1) Effective from 17 March 2022, the exercise price of these options were reduced by A$0.03 (3 cents) per options to A$0.67 in accordance with the
terms of the Employee Incentive Plan adopted on 17 May 2018 and refreshed on 21 May 2021, ASX Listing Rules 3.11.2 and 6.22 as a result of the
issuance of shares from a 1 for 5.9 pro-rata accelerated non-renounceable entitlement offer.
82
SYRAH RESOURCES > ANNUAL REPORT 2021
c) Summary and movement of performance rights on issue
The table below summarises the number and movements in Performance Rights issued during the financial year:
Balance at the beginning of the year
Granted during the year
Exercised during the period
Lapsed during the year
Forfeited during the year
Balance at the end of the year
At 31 December 2021:
- Vested
- Unvested
Performance testing dates for unvested Performance Rights above
are as follows:
- 31 December 2020
- 01 January 2021
- 31 March 2021
- 01 January 2022
- 03 June 2022
- 01 January 2023
- 22 May 2023
- 01 January 2024
- 01 January 2025
2021
NUMBER
17,747,946
2020
NUMBER
2,026,974
3,410,166
16,248,463
(1,140,928)
(1,821,583)
-
(12,240)
(285,256)
(229,995)
18,195,601
17,747,946
1,579,590
-
16,616,011
17,747,946
18,195,601
17,747,946
-
-
-
3,126,652
95,988
188,324
3,290,850
3,221,098
100,000
100,000
6,231,160
6,215,884
100,000
4,494,001
2,400,000
-
2,400,000
2,400,000
16,616,011
17,747,946
Performance rights on issue as part of the NEDSP, EIP and LTIP have a nil exercise price.
d) Non-controlling interest
In accordance with the obligations imposed on Group’s subsidiary Twigg Exploration and Mining Limitada under the Mining
Agreement with the Mozambique Government, Syrah completed the transfer of 5% quota holding in Twigg Exploration and
Mining Limitada to EMEM.
The transaction was accounted for under AASB 2 Share-based payment and measured at fair value when the agreement
was entered into in 2018. In 2021, the shares were transferred to EMEM at which point the share-based payment reserve was
transferred to non-controlling interest.
e) Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the financial year were as follows:
Recognised in profit and loss:
Employee benefits
- Options issued under the EIP
- Performance rights issued under the EIP
- Performance rights issued under the NEDSP
- Equity settled remuneration
2021
2020
US$’000
US$’000
-
1,787
385
598
2,770
61
1,326
96
326
1,809
83
NOTE 17. REMUNERATION OF AUDITORS
During the financial year the following fees were paid or payable for services provided by the auditor of the parent entity, its
related practices and non-related audit firms.
Assurance services:
PwC Australian firm
Network firms of PwC Australian firm
Total remuneration for audit services
Non-assurance services:
PwC Australian firm
Tax compliance services
Tax consulting services
Network firms of PwC Australian firm
Other consulting services
Total remuneration for non-assurance services
Total remuneration paid to PricewaterhouseCoopers
NOTE 18. EARNINGS PER SHARE
Earnings/(losses) per share
Basic loss per share
Diluted loss per share
a) Reconciliations of earnings used in calculating earnings per share
2021
2020
US$’000
US$’000
191
79
270
34
60
-
94
364
209
65
274
28
73
4
105
379
2021
2020
US Cents
US Cents
(10.79)
(10.79)
(14.59)
(14.59)
2021
2020
US$’000
US$’000
Basic loss
Total profit/(loss) attributable to the ordinary equity holders of the Company used in
calculating basic loss per share
(53,560)
(60,870)
Diluted loss
Total profit/(loss) attributable to the ordinary equity holders of the Company used in
calculating diluted loss per share
b) Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the denominator in calculating basic
loss per share
Weighted average number of ordinary shares used as the denominator in calculating
diluted loss per share
(53,560)
(60,870)
2021
2020
NUMBER
NUMBER
496,600,032
417,270,716
496,600,032
417,270,716
84
SYRAH RESOURCES > ANNUAL REPORT 2021
Options
The rights to options held by option holders have not been included in the weighted average number of ordinary shares for the
purposes of calculating diluted EPS as they do not meet the requirements for inclusion in AASB 133 Earnings per Share. The
rights to options are non-dilutive as the group is loss making.
NOTE 19. PARENT ENTITY FINANCIAL INFORMATION
a) Summary financial information
The individual financial statements for the parent entity show the following aggregate amounts:
Balance sheet
Current assets
Total assets
Current liabilities
Total liabilities
Shareholders’ equity
Issued capital
Reserves
Accumulated losses
Total equity
Loss after income tax for the year
Other comprehensive income/ (loss)
Total comprehensive income/ (loss) for the year
2021
2020
US$’000
US$’000
40,755
458,021
1,769
71,730
71,560
498,380
2,270
50,476
619,285
(19,123)
604,920
11,924
(213,870)
(168,940)
386,292
447,904
(45,970)
(31,880)
(77,850)
(11,706)
46,074
34,368
b) Contingent liabilities of the parent entity
The parent entity has no contingent liabilities as at 31 December 2021 and 31 December 2020.
c) Guarantees of the parent entity
A parent company guarantee is required to be provided by Syrah Resources Limited in favour of the Government of
Mozambique, which unconditionally and irrevocably guarantees amounts up to a maximum of US$22.5 million to cover any
loss or damage or other costs arising out of, or associated with, a breach of the Mining Concession held by Twigg. This
guarantee was required to remain in place for a period of two years after the signing of the Mining Agreement. This guarantee
expired prior to end of this reporting period, although a formal release of the guarantee by the Government of Mozambique
has not yet been received.
At the commencement of the production suspension at Balama, Syrah Global DMCC and Grindrod Mauritius agreed to
an immediate reduction in monthly cash payments for contracted fixed costs through to December 2021 in exchange for a
commitment to repay the foregone amount of a maximum US$7.2m once volume and price reach certain thresholds on a
consistent basis, or at the end of the contract term if not repaid by then, secured by a parent company guarantee. Under the
terms of the agreement, the repayment obligation would be lower if Balama resumed production earlier than December 2021
and does not receive the monthly fixed cost reduction, or if certain services were used prior to the end of the arrangement.
The arrangement ended on 31 December 2021 and the amount owed is US$4.6m.
85
NOTE 20. SUBSIDIARIES
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance
with the accounting policy described in note 22.
NAME
Jacana Resources Proprietary Limited
PRINCIPAL PLACE OF BUSINESS /
COUNTRY OF INCORPORATION
Australia
2021 (%)
100
2020 (%)
100
PERCENTAGE OF EQUITY
INTEREST HELD BY THE GROUP
Syrah Resources (KSA) Pty Ltd
Australia
Twigg Exploration and Mining, Limitada
Mozambique
Jacana Resources (Zambia) Ltd
Syrah Resources Saudi Arabia LLC
Zambia
Saudi Arabia
Syrah Resources Group Holdings Pty Ltd
Australia
Syrah Resources and Trading DMCC
United Arab Emirates
Syrah Global DMCC
Syrah US Holdings Pty Ltd
Syrah Technologies LLC
United Arab Emirates
Australia
United States of America
100
95(1)
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
(1) In accordance with the obligations under the Mining Agreement between the Mozambique Government and Twigg Exploration and Mining Limitada,
the Mozambique Government holds a 5% minority interest in Twigg through EMEM.
NOTE 21. DEED OF CROSS GUARANTEE
The following entities are party to a deed of cross guarantee (Deed), as defined in ASIC Corporations (Wholly-owned
Companies) Instrument 2016/785 (ASIC Instrument):
Syrah Resources Limited
Jacana Resources Proprietary Limited (formerly Jacana Resources Limited)
The above companies represent a ‘Closed Group’ for the purposes of the ASIC Instrument, and as there are no other parties
to the Deed that are controlled by Syrah Resources Limited, they also represent the ‘Extended Closed Group’. The effect of the
Deed is that each party to the Deed guarantees the debts of the other entities in the Closed Group in the event of winding up.
Pursuant to the ASIC Instrument, the eligible wholly-owned entities within the Closed Group have been relieved from the
requirement to prepare financial statements and a directors’ report under the ASIC Instrument issued by the Australian
Securities and Investments Commission (ASIC).
86
SYRAH RESOURCES > ANNUAL REPORT 2021
a)
Consolidated statement of comprehensive income and summary of movements in
consolidated accumulated losses
Set out below is a consolidated statement of comprehensive income and a summary of movements in consolidated
accumulated losses for the current or previous financial year for the ‘Closed Group’.
Consolidated statement of comprehensive income
Revenue from continuing operations
Expenses:
Employee benefits expense
Legal and consulting expense
Depreciation and amortisation expense
Foreign exchange gains/(losses) net
Other expenses
Impairment of assets
Finance expenses
Loss for the year before income tax expense
Income tax expense
Loss after income tax expense for the year
Other comprehensive income/ (loss)
Exchange differences on translation of foreign subsidiaries
Total comprehensive income/ (loss) for the year
Summary of movements in consolidated accumulated losses
Balance at beginning of the year
Loss after income tax expense for the year
Transfer from share-based payment reserve
Balance at end of the year
2021
2020
US$’000
US$’000
127
283
(6,237)
(1,472)
(193)
2,669
(1,191)
(34,690)
(4,993)
(45,980)
-
(4,428)
(1,003)
(181)
(2,272)
(667)
-
(3,450)
(11,718)
-
(45,980)
(11,718)
(31,358)
(77,338)
45,257
33,539
(169,997)
(45,980)
1,040
(159,463)
(11,718)
1,184
(214,937)
(169,997)
87
b) Consolidated statement of financial position
Set out below is a consolidated statement of financial position as at the end of the current and previous financial year for the
‘Closed Group’.
Current assets
Cash and cash equivalents
Trade and other receivables
Available-for-sale financial assets
Total current assets
Non-current assets
Other receivables
Property, plant and equipment
Mining assets
Intangibles
Investments in subsidiaries
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Lease liabilities
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Lease liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
88
2021
2020
US$’000
US$’000
31,848
62,124
173
394
285
299
32,415
62,708
623
11,094
11,580
79
404,219
427,595
309
10,202
11,584
8
414,388
436,491
460,010
499,199
1,386
12
371
1,769
1,826
169
275
2,270
69,852
47,468
8
101
-
79
69,961
47,547
71,730
49,817
388,280
449,382
619,285
(16,077)
604,920
14,447
(214,928)
(169,985)
388,280
449,382
SYRAH RESOURCES > ANNUAL REPORT 2021
NOTE 22. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation
of the consolidated financial statements are set out below.
These policies have been consistently applied for all the
periods presented, unless otherwise stated.
The financial statements are for the consolidated entity
consisting of Syrah Resources Limited and its subsidiaries.
Syrah Resources Limited and its subsidiaries together are
referred to in these financial statements as the Group or the
‘consolidated entity’.
a) Principles of consolidation
The consolidated financial statements incorporate the assets
and liabilities of all subsidiaries of Syrah Resources Limited
(‘Company’ or ‘parent entity’) as at 31 December 2021 and
the results of all subsidiaries for the financial year then
ended.
Subsidiaries are all those entities over which the consolidated
entity has control. The consolidated entity controls an entity
when the consolidated entity is exposed to, or has rights to,
variable returns from its involvement with the entity and has
the ability to affect those returns through its power to direct
the relevant activities of the entity. Subsidiaries are fully
consolidated from the date on which control is transferred to
the consolidated entity. They are de-consolidated from the
date that control ceases. Details of subsidiaries are set out in
note 20.
The acquisition of subsidiaries is accounted for using the
acquisition method of accounting. A change in ownership
interest, without the loss of control, is accounted for as
an equity transaction, where the difference between the
consideration transferred and the book value of the share of
the non-controlling interest acquired is recognised directly in
equity attributable to the parent.
Where the consolidated entity loses control over a subsidiary,
it derecognises the assets including goodwill, liabilities
and non-controlling interest in the subsidiary together with
any cumulative translation differences recognised in equity.
The consolidated entity recognises the fair value of the
consideration received and the fair value of any investment
retained together with any gain or loss in the profit and loss.
Intercompany transactions, balances and unrealised gains
on transactions between Group entities are eliminated.
Unrealised losses are also eliminated unless the transaction
provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed
where necessary to ensure consistency with the policies
adopted by the Group.
Investments in subsidiaries are accounted for at cost in the
individual financial statements of Syrah Resources Limited.
b) Segment reporting
Operating segments are presented using the ‘management
approach’, where the information presented is on the same
basis as the internal reports provided to the Chief Operating
Decision Maker (‘CODM’). The CODM is responsible for the
allocation of resources to operating segments and assessing
their performance. Refer to note 2 for further information on
segment descriptions.
c)
Foreign currency translation
Functional and presentation currency
Items included in the financial statements of each of the
Group’s entities are measured using the currency of the
primary economic environment in which the entity operates
(‘the functional currency’). The consolidated financial
statements are presented in United States dollars (USD).
Transactions and balances
All foreign currency transactions during the financial period are
translated into the functional currency using the exchange rate
prevailing at the dates of the transactions. Foreign exchange
gains and losses resulting from the settlement of such
transactions and from the translation at period end exchange
rates of monetary assets and liabilities denominated in foreign
currencies are recognised in the profit and loss, except when
they are deferred in equity as qualifying cash flow hedges and
qualifying net investment hedges or are attributable to part of
the net investment in a foreign operation.
Non-monetary items that are measured in terms of historical
cost in foreign currency are translated using the exchange rate
as at the date of the initial transaction. Non-monetary items
measured at fair value in a foreign currency are translated
using the exchange rates at the date when the fair value was
determined.
Foreign exchange gains and losses that relate to borrowings
are presented in the Statement of Comprehensive Income
within Finance Costs. All other foreign exchange gains and
losses are presented in the Statement of Comprehensive
Income on a net basis within Other Income or Other Expenses.
Group companies
The results and financial position of all the Group entities (none
of which has the currency of a hyperinflationary economy)
that have a functional currency different from the presentation
currency are translated into the presentation currency as
follows:
> assets and liabilities for each balance sheet presented are
translated at the closing rate at the date of that balance
sheet;
> income and expenses for each statement of
comprehensive income are translated at average exchange
rates (unless this is not a reasonable approximation of the
cumulative effect of the rates prevailing on the transaction
dates, in which case income and expenses are translated
at the dates of the transactions); and
> all resulting exchange differences are recognised as a
separate component of equity.
On consolidation, exchange differences arising from the
translation of any net investment in foreign entities, and of
borrowings and other financial instruments designated as
hedges of such investments, are taken to shareholders’ equity.
When a foreign operation is sold or any borrowings forming
part of the net investment are repaid, a proportionate share
of such exchange differences are recognised in the profit
and loss, as part of the gain or loss on sale where applicable.
Goodwill and fair value adjustments arising on the acquisition
of a foreign entity are treated as assets and liabilities of the
foreign entities and translated at the closing rate.
89
Deferred income tax is provided in full, using the liability
method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in
the consolidated financial statements.
However, deferred tax liabilities are not recognised if they
arise from the initial recognition of goodwill. Deferred income
tax is also not accounted for if it arises from initial recognition
of an asset or liability in a transaction other than a business
combination that at the time of the transaction affects neither
accounting nor taxable profit or loss. Deferred income tax
is determined using tax rates (and laws) that have been
enacted or substantially enacted by the end of the reporting
period and are expected to apply when the related deferred
income tax asset is realised or the deferred income tax
liability is settled.
Deferred tax assets are recognised for deductible temporary
differences, including unused tax losses, only if it is probable
that future taxable amounts will be available to utilise those
temporary differences and losses.
Deferred tax liabilities and assets are not recognised for
temporary differences between the carrying amount and
the tax bases of investments in foreign operations where the
company is able to control the timing of the reversal of the
temporary differences and it is probable that the differences
will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is
a legally enforceable right to offset current tax assets and
liabilities and when the deferred tax balances relate to the
same taxation authority. Current tax assets and tax liabilities
are offset where the entity has a legally enforceable right to
offset and intends either to settle on a net basis, or to realise
the asset and settle the liability simultaneously.
Tax Consolidation Legislation
Syrah Resources Limited (the “head entity”) and its wholly-
owned Australian subsidiaries formed an income tax
consolidated group on 1 July 2014. The head entity and each
subsidiary in the tax consolidated group continue to account
for their own current and deferred tax amounts. The tax
consolidated group has applied the ‘separate taxpayer within
group’ approach in determining the appropriate amount of
taxes to allocate to members of the tax consolidated group.
In addition to its own current and deferred tax amounts,
the head entity also recognises the current tax liabilities (or
assets) and the deferred tax assets arising from unused tax
losses and unused tax credits assumed from each subsidiary
in the tax consolidated group.
Assets or liabilities arising under tax funding agreements
within the tax consolidated entities are recognised as
amounts receivable from or payable to other entities in the tax
consolidated group. The tax funding arrangement ensures
that the intercompany charge equals the current tax liability
or benefit of each tax consolidated group member, resulting
in neither a contribution by the head entity to the subsidiaries
nor a distribution by the subsidiaries to the head entity.
d) Revenue recognition
Revenue is recognised when it is probable that the economic
benefit will flow to the consolidated entity and the revenue
can be reliably measured. Revenue is measured at the fair
value of the consideration received or receivable.
Revenue is recognised for the major business transactions as
follows:
Sales of Graphite
The Group recognises revenue related to the sale of graphite
when control of the goods passes to customers and the
amount of revenue can be measured reliably. The majority of
the Group’s sales arrangements specify that control passes
when the product is transferred to the vessel on which the
product will be shipped. Revenues are generally recognised
on the bill of lading date. Revenue is recognised and
measured at the fair value of the consideration received or
receivable, net of agency commissions. Sales arrangements
allow for an adjustment to the sales price based on a survey
of the goods by the customer (an assay for mineral content
and particle size distribution). If necessary, adjustments to
sales revenues arising from a survey of the goods by the
customer are accounted for in the period in which the Group
agrees to such adjustments.
The Group sells a significant proportion of its products on
CIF Incoterm. This means that the Group is responsible for
providing shipping services after the date at which control
of the goods passes to the customer at the loading port.
The Group treats freight, where applicable, as a separate
performance obligation and therefore recognises the revenue
and associated costs over time.
Interest
Interest revenue is recognised as interest accrues using the
effective interest method. This is a method of calculating the
amortised cost of a financial asset and allocating the interest
income over the relevant period using the effective interest
rate, which is the rate that exactly discounts estimated future
cash receipts through the expected life of the financial asset
to the net carrying amount of the financial asset.
Other revenue
Other revenue is recognised when it is received or when the
right to receive payment is established.
Income tax
e)
The income tax expense or benefit for the period is the tax
payable on the current period’s taxable income based on the
applicable income tax rate for each jurisdiction, adjusted by
changes in deferred tax assets and liabilities attributable to
temporary differences, unused tax losses and the adjustment
recognised for prior periods, where applicable.
The current income tax charge is calculated on the basis of
the tax laws enacted or substantively enacted at the end of
the reporting period in the countries where the company’s
subsidiaries operate and generate taxable income.
Management periodically evaluates positions taken in tax
returns with respect to situations in which applicable tax
regulation is subject to interpretation. It establishes provisions
where appropriate on the basis of amounts expected to be
paid to the tax authorities.
90
SYRAH RESOURCES > ANNUAL REPORT 2021 Leases
f)
The Group leases various offices, warehouses and
equipment. Rental contracts are typically made for fixed
periods of 1 to 11 years but may have extension options.
Contracts may contain both lease and non-lease
components. The group allocates the consideration in the
contract to the lease and non-lease components based on
their relative stand-alone prices. However, for leases of office
for which the Group is a lessee, it has elected not to separate
lease and non-lease components and instead accounts for
these as a single lease component.
Lease terms are negotiated on an individual basis and
contain a wide range of different terms and conditions. The
lease agreements do not impose any covenants, but leased
assets may not be used as security for borrowing purposes.
Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities include
the net present value of the following lease payments:
> fixed payments (including in-substance fixed payments),
less any lease incentives receivable
> The lease payments are discounted using the Group’s
incremental borrowing rate, being the rate that the Group
would have to pay to borrow the funds necessary to
obtain an asset of similar value in a similar economic
environment with similar terms and conditions
To determine the incremental borrowing rate, the group:
> where possible, uses recent third-party financing
received as a starting point and make adjustments
specific to the lease, eg term, country, currency and
security.
Each lease payment is allocated between the liability and
finance cost. The finance cost is charged to profit or loss
over the lease period to produce a constant periodic rate
of interest on the remaining balance of the liability for each
period.
Right of use assets are measured at cost comprising the
following:
> the amount of the initial measurement of lease liability
> any lease payments made at or before the
commencement date less any lease incentives received
> any initial direct costs, and
> restoration costs
The Right of use Asset is depreciated over the shorter of the
asset's useful life and the lease term on a straight-line basis.
Payments associated with short-term leases and leases of
low-value assets are recognised on a straight-line basis as an
expense in profit or loss. Short-term leases are leases with a
lease term of 12 months or less. Low-value assets comprise
of IT equipment and office equipment.
Extension and termination options are included in several
leases across the Group. These are used to maximise
operational flexibility in terms of managing the assets used
in the Group’s operations. The majority of extension and
termination options held are exercisable only by the Group
and not by the respective lessor.
g) Current and non-current classification
Assets and liabilities are presented in the balance sheet
based on current and non-current classification.
An asset is current when: it is expected to be realised or
intended to be sold or consumed in normal operating cycle;
it is held primarily for the purpose of trading; it is expected to
be realised within 12 months after the reporting period; or the
asset is cash or cash equivalent unless restricted from being
exchanged or used to settle a liability for at least 12 months
after the reporting period. All other assets are classified as
non-current.
A liability is current when: it is expected to be settled in
normal operating cycle; it is held primarily for the purpose
of trading; it is due to be settled within 12 months after the
reporting period; or there is no unconditional right to defer
the settlement of the liability for at least 12 months after the
reporting period. All other liabilities are classified as non-
current.
Deferred tax assets and liabilities are always classified as
non-current.
h) Cash and cash equivalents
For the purpose of presentation in the Statement of Cash
Flows, Cash and Cash Equivalents comprises cash on
hand, deposits held at call with financial institutions, other
short-term, highly liquid investments with maturities of three
months or less that are readily convertible to amounts of cash
and which are subject to an insignificant risk of changes in
value, and bank overdrafts. Bank overdrafts are shown within
Borrowings in current liabilities on the balance sheet.
Trade and other receivables
i)
Trade and other receivables are recognised at amortised
cost, less any provision for impairment.
Inventories
j)
Inventories are valued at the lower of weighted average
cost and estimated net realisable value. Cost is determined
primarily on the basis of weighted average costs and
comprises of the purchase price of direct materials and the
costs of production which include:
> labour costs, materials and contractor expenses which
are directly attributable to the extraction and processing
of ore;
> depreciation of mining assets, property, plant and
equipment used in the extraction and processing of ore;
and
> production overheads directly attributable to the
extraction and processing of ore.
Stockpiles represent ore that has been extracted and
is available for further processing and work-in-progress
includes partly processed material. If there is significant
uncertainty as to when the stockpiled ore will be processed it
is expensed as mined. If the ore will not be processed within
12 months after the balance sheet date it is included within
non-current assets. Quantities of stockpiled ore are assessed
primarily through surveys and assays.
The net realisable value is the estimated selling price in the
ordinary course of business less the estimated costs of
completion and the estimated costs necessary to make the
sale, including royalties.
91
k) Property, plant and equipment
Plant and equipment is stated at historical cost less, where
applicable, any accumulated depreciation, amortisation or
impairment in value. Historical cost includes expenditure that
is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying
amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits
associated with the item will flow to the Group and the
cost of the item can be measured reliably. The carrying
amount of any component accounted for as a separate
asset is derecognised when replaced. All other repairs
and maintenance are charged to profit and loss during the
reporting period in which they are incurred.
Land is not depreciated. Assets Under Construction are
measured at cost and are not depreciated until they are
ready and available for use. Depreciation on assets is
calculated using either a straight-line or diminishing value
method to allocate the cost, net of their residual values, over
the estimated useful lives or the life of the mine, whichever is
shorter. Leasehold improvements and certain leased plant
and equipment are depreciated over the shorter lease term.
Other non-mine plant and equipment typically has the
following estimated useful lives:
Buildings
10 to 50 years
Plant and equipment
5 to 50 years
Computer equipment
2 to 6 years
The assets residual values, useful lives and amortisation
methods are reviewed and adjusted if appropriate, at each
financial period end.
An item of property, plant and equipment is derecognised
upon disposal or when no further economic benefits are
expected from its use or disposal.
Any gain or loss arising on de-recognition of the asset
(calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is included
in the profit and loss in the period the asset is derecognised.
Intangible assets
l)
Intangible assets acquired as part of a business
combination, other than goodwill, are initially measured
at their fair value at the date of the acquisition. Intangible
assets acquired separately are initially recognised at cost.
Indefinite life intangible assets are not amortised and are
subsequently measured at cost less any impairment in value.
Finite life intangible assets are subsequently measured at
cost less amortisation and any impairment in value. The
gains or losses recognised in profit and loss arising from
the de-recognition of intangible assets are measured as the
difference between net disposal proceeds and the carrying
amount of the intangible asset. The method and useful lives
of finite life intangible assets are reviewed annually. Changes
in the expected pattern of consumption or useful life are
accounted for prospectively by changing the amortisation
method or period.
Software
Significant costs associated with software are deferred
and amortised on either a straight-line or diminishing value
method over the estimated useful life, being a finite life not
exceeding 5 years.
92
m) Mine properties and development
Mine Properties and Development
Mine Properties and Development represents the
accumulation of all exploration, evaluation and development
expenditure incurred by, or on behalf of, the entity in relation
to areas of interest in which construction or development
has commenced and/or mining of a mineral resource has
commenced. Where further development expenditure
is incurred in respect of a production property after the
commencement of production, such expenditure is carried
as part of the cost of that production property only when
substantial future economic benefits arise, otherwise such
expenditure is classified as part of the cost of production.
Mine development costs for production properties in which
the Group has an interest are amortised over the estimated
life of mine on a straight-line basis.
n) Exploration and evaluation
Exploration and evaluation expenditure comprise costs which
are directly attributable to:
> research and analysing exploration data;
> conducting geological studies, exploratory drilling and
sampling;
> examining and testing extraction and treatment methods;
and
> compiling scoping and feasibility studies.
Exploration and evaluation expenditure in relation to separate
areas of interest for which rights of tenure are current is
carried forward as an asset in the balance sheet where
it is expected that expenditure will be recovered through
the successful development and exploitation of an area or
interest, or by its sale; or exploration and evaluation activities
are continuing in an area of interest and those activities have
not reached a stage which permits a reasonable estimate
of the existence or otherwise of economically recoverable
reserves. Where a project or an area of interest has been
abandoned, the expenditure incurred thereon is written
off to the profit and loss in the financial period in which the
decision is made.
Exploration and evaluation expenditure is reclassified to Mine
Properties and Development in the financial period when the
technical feasibility and commercial viability of extracting
a mineral resource is demonstrated. The carrying value of
the exploration and evaluation expenditure is assessed for
impairment prior to reclassification (refer to note 9).
Impairment of assets
o)
Goodwill and other intangible assets that have an indefinite
useful life are not subject to amortisation and are tested
annually for impairment, or more frequently if events or
changes in circumstances indicate that they might be
impaired.
At each reporting date, the Group assesses whether there
is any indication that other non-financial assets may be
impaired. Where an indicator of impairment exists, the Group
makes a formal estimate of the recoverable amount. Where
the carrying amount of an asset exceeds its recoverable
amount the asset is considered impaired and is written down
to its recoverable amount. Impairment losses are recognised
in profit and loss.
SYRAH RESOURCES > ANNUAL REPORT 2021
Recoverable amount is the greater of fair value less costs of
disposal and value-in-use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which
there are separately identifiable cash inflows which are
largely independent of the cash inflows from other assets or
groups of assets (cash generating units).
Where there is no binding sale agreement or active market,
fair value less costs of disposal is based on the best
information available to reflect the amount the Group could
receive for the cash generating unit in an arm’s length
transaction. In assessing value in use, the estimated future
cash flows are discounted to their present value using a post-
tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset.
An assessment is also made at each reporting date as to
whether there is any indication that previously recognised
impairment losses may no longer exist or may have
decreased. If such indication exists, the recoverable amount
is estimated. A previously recognised impairment loss is
reversed only if there has been a change in the estimates
used to determine the asset’s recoverable amount since the
last impairment loss was recognised. If that is the case the
carrying amount of the asset is increased to its recoverable
amount. That increased amount cannot exceed the pre-
impairment value, adjusted for any depreciation that would
have been recognised on the asset had the initial impairment
loss not occurred. Such reversal is recognised in profit or
loss.
After such a reversal the depreciation charge is adjusted
in future periods to allocate the asset’s revised carrying
amount, less any residual value, on a systematic basis over
its remaining useful life.
p) Ore reserves
The Company estimates its mineral resources and ore
reserves based on information compiled by Competent
Persons as defined in accordance with the Australasian
Code for Reporting of Exploration Results, Mineral Resources
and Ore Reserves of December 2012 (the JORC 2012 code).
Reserves, and for certain mineral resources, determined
in this way are used in the calculation of depreciation,
amortisation and impairment charges.
In assessing the life of a mine for accounting purposes,
mineral resources are only taken into account where there is
a high degree of confidence of economic extraction.
q)
Investments and other financial assets
(i) Classification
The Group classifies its financial assets in the following
measurement categories:
> those to be measured subsequently at fair value (either
through OCI or through profit or loss); and
> those to be measured at amortised cost.
The classification depends on the Group’s business model
for managing the financial assets and the contractual terms
of the cash flows.
For assets measured at fair value, gains and losses will either
be recorded in the Statement of Comprehensive Income or
Other Comprehensive Income.
The Group reclassify debt investments when and only when
its business model for managing those assets changes.
(ii) Recognition and derecognition
Regular way purchases and sales of financial assets are
recognised on trade-date, the date on which the Group
commit to purchase or sell the asset. Financial assets are
derecognised when the rights to receive cash flows from the
financial assets have expired or have been transferred and
the Group have transferred substantially all the risks and
rewards of ownership.
(iii) Measurement
At initial recognition, the Group measures financial assets at
its fair value plus, in the case of a financial assets not at fair
value through profit or loss (FVPL), transaction costs that are
directly attributable to the acquisition of the financial assets.
Transaction costs of financial assets carried at FVPL are
expensed in the Statement of Comprehensive Income.
Financial assets with embedded derivatives are considered
in their entirety when determining whether their cash flows
are solely payment of principal and interest.
Debt instruments
Subsequent measurement of debt instruments depends
on the Group’s business model for managing the asset and
the cash flow characteristics of the asset. There are three
measurement categories into which the Group classify its
debt instruments:
Amortised cost: Assets that are held for collection of
contractual cash flows where those cash flows represent
solely payments of principal and interest are measured at
amortised cost. Interest income from these financial assets
is included in finance income using the effective interest
rate method. Any gain or loss arising on derecognition is
recognised directly in the statement of comprehensive
income and presented in other gains/(losses) together with
foreign exchange gains and losses. Impairment losses
are presented as separate line item in the Statement of
Comprehensive Income.
Fair value through other comprehensive income (FVOCI):
Assets that are held for collection of contractual cash flows
and for selling the financial assets, where the assets’ cash
flows represent solely payments of principal and interest, are
measured at FVOCI. Movements in the carrying amount are
taken through other comprehensive income (OCI), except
for the recognition of impairment gains or losses, interest
income and foreign exchange gains and losses which are
recognised in the statement of comprehensive income. When
the financial asset is derecognised, the cumulative gain or
loss previously recognised in OCI is reclassified from equity
to the statement of comprehensive income and recognised
in other gains/(losses). Interest income from these financial
assets is included in finance income using the effective
interest rate method. Foreign exchange gains and losses are
presented in other gains/(losses) and impairment expenses
are presented as separate line item in the Statement of
Comprehensive Income.
FVPL: Assets that do not meet the criteria for amortised
cost or FVOCI are measured at FVPL. A gain or loss on a
debt investment that is subsequently measured at FVPL
is recognised in statement of comprehensive income and
presented net within other gains/(losses) in the period in
which it arises.
93
Equity instruments
The Group subsequently measures all equity investments
at fair value. Where the group’s management has elected
to present fair value gains and losses on equity investments
in OCI, there is no subsequent reclassification of fair value
gains and losses to Statement of Comprehensive Income
following the derecognition of the investment. Dividends from
such investments continue to be recognised in Statement of
Comprehensive Income as other income when the group’s
right to receive payments is established.
Changes in the fair value of financial assets at FVPL are
recognised in other gains/(losses) in the Statement of
Comprehensive Income as applicable. Impairment losses
(and reversal of impairment losses) on equity investments
measured at FVOCI are not reported separately from other
changes in fair value.
Impairment
(iv)
The Group assess on a forward-looking basis the expected
credit losses associated with its debt instruments carried at
amortised cost and FVOCI. The impairment methodology
applied depends on whether there has been a significant
increase in credit risk.
Expected credit losses for the Group’s trade receivables are
reviewed on an ongoing basis. The Group has policies in
place to manage exposures to customers from the sale of
graphite. These include credit coverage by the issuance of
letters of credit from high credit quality financial institutions
and limits on credit exposures to individual customers where
there is no letter of credit.
Trade and other payables
r)
Trade and other payables are carried at amortised cost and
represent liabilities for goods and services provided to the
Group prior to the end of the financial period that are unpaid.
They arise when the Group becomes obliged to make future
payments in respect of the purchase of these goods and
services. The amounts are unsecured and current trade and
other payables are usually paid within 30 days of recognition.
s) Borrowings
Borrowings are recognised initially at fair value. Borrowings
are subsequently measured at amortised costs, representing
the applicable interest rate on the borrowings, and any value
attributed to the option to convert the Note. The fee paid on
the establishment of loan facilities was capitalised into the
value of the loan, along with interest which can be paid to the
Noteholder at a rate of 7.5% or capitalised at a rate of 8.0%.
Borrowings are removed from the balance sheet when the
obligation specified in the contract is discharged, cancelled or
expired. Borrowings are classified as current liabilities unless
the Group has an unconditional right to defer settlement of the
liability for at least 12 months after the reporting period.
Provisions
t)
Provisions are recognised when the Group has a present
obligation, it is probable that there will be a future sacrifice of
economic benefits and a reliable estimate can be made of the
amount of the obligation.
When the Group expects some or all of a provision to be
recovered from a third party, for example under an insurance
contract, the receivable is recognised as a separate asset but
only when the reimbursement is virtually certain and it can
be measured reliably. The expense relating to any provision is
presented in the profit or loss net of any reimbursement.
If the effect of the time value of money is material, provisions
are discounted using a pre-tax rate that reflects the current
market assessment of the time value of money. Where this
is the case, its carrying amount is the present value of these
estimated future cash flows. When discounting is used,
the increase in the provision due to the passage of time is
recognised as a finance cost.
Decommissioning and restoration provision
Decommissioning and restoration provisions include the
dismantling and demolition of infrastructure and the removal
of residual materials and remediation of disturbed areas.
The provision is recognised in the accounting period when
the obligation arising from the related disturbance occurs,
whether this occurs during the mine development or during
the production phase, based on the net present value of
estimated future costs. The costs are estimated on the basis
of a closure plan drawn in accordance with the business
plan and environmental regulations. The cost estimates are
calculated annually during the life of the operation to reflect
known developments and are subject to formal review at
regular intervals.
The amortisation or ‘unwinding’ of the discount applied in
establishing the net present value of provisions is charged
to the profit or loss in each accounting period as a finance
cost. Any changes in the provision, including those resulting
from new disturbances, updated cost estimates, changes to
the lives of operations and revisions to discount rates, are
accounted for prospectively.
On initial recognition of the provision and for prospective
changes in estimates, an equivalent amount is capitalised as
part of Mine Properties and Development, or the respective
asset or area of interest that the restoration obligation relates
to. Capitalised decommissioning and restoration provision
costs are depreciated over the life of the respective assets.
Where future changes in the provision result in a significant
addition to the cost of the related asset, consideration will be
given to whether an indication of impairment exists and the
impairment policy will apply.
u) Employee entitlements
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary
benefits, annual leave and long service leave expected to be
settled within 12 months of the reporting date are recognised
in current liabilities in respect of employees’ services up
to the reporting date and are measured at the amounts
expected to be paid when the liabilities are settled.
94
SYRAH RESOURCES > ANNUAL REPORT 2021 Other long-term employee benefits
The liability for annual leave and long service leave not
expected to be settled within 12 months of the reporting
date are recognised in non-current liabilities, provided there
is an unconditional right to defer settlement of the liability.
The liability is measured as the present value of expected
future payments to be made in respect of services provided
by employees up to the reporting date using the projected
unit credit method. Consideration is given to expected future
wage and salary levels, experience of employee departures
and periods of service. Expected future payments are
discounted using market yields at the reporting date on
corporate bonds with terms to maturity and currency that
match, as closely as possible, the estimated future cash
outflows.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans
are expensed in the period in which they are incurred.
Share-based payments
Equity-settled and cash-settled share-based compensation
benefits are provided to employees.
Equity-settled transactions are awards of shares, rights
or options over shares that are provided to employees
in exchange for the rendering of services. Cash-settled
transactions are awards of cash for the exchange of
services, where the amount of cash is determined by
reference to the share price.
The cost of equity-settled transactions is measured at fair
value on grant date. Fair value is determined using the Black-
Scholes option pricing model that takes into account the
exercise price, the term of the option, the impact of dilution,
the share price at grant date and expected price volatility
of the underlying share, the expected dividend yield and
the risk free interest rate for the term of the option, together
with non-vesting conditions that do not determine whether
the consolidated entity receives the services that entitle the
employees to receive payment. No account is taken of any
other vesting conditions.
The cost of equity-settled transactions are recognised as an
expense with a corresponding increase in equity over the
vesting period. The cumulative charge to profit and loss is
calculated based on the grant date fair value of the award,
the best estimate of the number of awards that are likely
to vest and the expired portion of the vesting period. The
amount recognised in profit and loss for the period is the
cumulative amount calculated at each reporting date less
amounts already recognised in previous periods.
The cost of cash-settled transactions is initially, and at each
reporting date until vested, determined by applying the
Black-Scholes option pricing model, taking into consideration
the terms and conditions on which the award was granted.
The cumulative charge to profit or loss until settlement of the
liability is calculated as follows:
> during the vesting period, the liability at each reporting
date is the fair value of the award at that date multiplied
by the expired portion of the vesting period
> from the end of the vesting period until settlement of the
award, the liability is the full fair value of the liability at the
reporting date.
All changes in the liability are recognised in profit and loss.
The ultimate cost of cash-settled transactions is the cash
paid to settle the liability.
Market conditions are taken into consideration in determining
fair value. Therefore any awards subject to market conditions
are considered to vest irrespective of whether or not that
market condition has been met, provided all other conditions
are satisfied.
If equity-settled awards are modified, as a minimum an
expense is recognised as if the modification has not been
made. An additional expense is recognised, over the
remaining vesting period, for any modification that increases
the total fair value of the share-based compensation benefit
as at the date of modification.
If the non-vesting condition is within the control of the
consolidated entity or employee, the failure to satisfy the
condition is treated as a cancellation. If the condition is not
within the control of the consolidated entity or employee
and is not satisfied during the vesting period, any remaining
expense for the award is recognised over the remaining
vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it
has vested on the date of cancellation, and any remaining
expense is recognised immediately. If a new replacement
award is substituted for the cancelled award, the cancelled
and new award are treated as if they were a modification.
The dilutive effect, if any, of outstanding options is reflected
as additional share dilution in the computation of earnings
per share.
v) Contributed equity
Ordinary shares are classified as equity and recognised at
the fair value of the consideration received by the Company.
Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction, net of
tax, of the share proceeds received.
w) Fair value measurement
When an asset or liability, financial or non-financial, is
measured at fair value for recognition or disclosure purposes,
the fair value is based on the price that would be received
to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement
date; and assumes that the transaction will take place either:
in the principal market; or in the absence of a principal
market, in the most advantageous market.
Fair value is measured using the assumptions that market
participants would use when pricing the asset or liability,
assuming they act in their economic best interest. For
non-financial assets, the fair value measurement is based
on its highest and best use. Valuation techniques that are
appropriate in the circumstances and for which sufficient
data are available to measure fair value, are used,
maximising the use of relevant observable inputs and
minimising the use of unobservable inputs.
95
aa) New accounting standards and
interpretations
No new or amended accounting standards and
interpretations became applicable for the current reporting
period which had an impact on the Group’s accounting
policies.
ab) New accounting standards and
interpretations not yet adopted
Certain new accounting standards, amendments to
accounting standards and interpretations have been
published that are not mandatory for 31 December 2021
reporting periods and have not been early adopted by the
Group. These standards, amendments or interpretations are
not expected to have a material impact on the entity in the
current or future reporting periods and on foreseeable future
transactions.
x) Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing:
> the profit attributable to equity holders of the Company,
excluding any costs of servicing equity other than
ordinary shares;
> by the weighted average number of ordinary shares
outstanding during the financial period, adjusted for
bonus elements in ordinary shares issued during the
period and excluding treasury shares.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in
the determination of basic earnings per share to take into
account:
> the after income tax effect of interest and other financing
costs associated with dilutive potential ordinary shares;
and
> the weighted average number of additional ordinary
shares that would have been outstanding assuming the
conversion of all dilutive potential ordinary shares.
y) Goods and services tax (‘GST’) and
other similar taxes
Revenues, expenses and assets are recognised net of the
amount of associated GST, unless the GST incurred is not
recoverable from the tax authority. In this case it is recognised
as part of the cost of the acquisition of the asset or as part
of the expense.
Receivables and payables are stated inclusive of the amount
of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the tax authority is included
in other receivables or other payables in the statement of
financial position.
Cash flows are presented on a gross basis. The GST
components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the tax
authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the
amount of GST recoverable from, or payable to, the tax
authority.
z) Rounding of amounts
The amounts contained in the financial report have been
rounded off to the nearest $'000 (where rounding is
applicable) under the relief available to the Company
under ASIC Corporations (Rounding in Financial Reports)
Instrument 2016/191. The Company is an entity to which the
Class Order applies.
96
SYRAH RESOURCES > ANNUAL REPORT 2021 DIRECTORS’ DECLARATION
SYRAH RESOURCES LIMITED
ABN 77 125 242 284
Registered Office:
c/- Vistra Australia (Melbourne) Pty Ltd
Level 4, 96-100 Albert Road,
South Melbourne, VIC 3205
Principal Place of Business:
c/- Work Club Melbourne Olderfleet
477 Collins Street, Melbourne, VIC 3000
t: +61 3 9670 7264
e: enquiries@syrahresources.com.au
w: www.syrahresources.com.au
In the Directors’ opinion:
(a) the financial statements and notes set out on pages 51 to 96 are in accordance with the Corporations
Act 2001, including:
(i) complying with Accounting Standards, the Corporations Regulations 2001 and other
mandatory professional reporting requirements, and
(ii) giving true and fair view of the consolidated entity’s financial position as at 31 December 2021
and of its performance for the year ended on that date, and
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when
they become due and payable, and
(c) at the date of this declaration, there are reasonable grounds to believe that the members of the
extended closed group identified in note 20 will be able to meet any obligations or liabilities to which
they are, or may become, subject by virtue of the deed of cross guarantee described in note 21.
Note 1(a) confirms that the financial statements also comply with International Financial Reporting
Standards as issued by the International Accounting Standards Board.
The Directors have been given the declarations by the Managing Director and Chief Financial Officer as
required by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Directors.
Shaun Verner
Managing Director
Melbourne, Australia
24 March 2022
97
AUDITOR’S REPORT
Independent auditor’s report
To the members of Syrah Resources Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of Syrah Resources Limited (the Company) and its controlled
entities (together the Group) is in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the Group's financial position as at 31 December 2021 and of its
financial performance for the year then ended
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group financial report comprises:
●
●
●
●
●
●
the consolidated statement of financial position as at 31 December 2021
the consolidated statement of comprehensive income for the year then ended
the consolidated statement of changes in equity for the year then ended
the consolidated statement of cash flows for the year then ended
the notes to the consolidated financial statements, which include significant accounting policies
and other explanatory information
the directors’ declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999
Liability limited by a scheme approved under Professional Standards Legislation.
98
SYRAH RESOURCES > ANNUAL REPORT 2021
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial report as a whole, taking into account the geographic and management
structure of the Group, its accounting processes and controls and the industry in which it operates.
The Group’s operations consist principally of the Balama Graphite Operation located in Mozambique,
and the Vidalia Active Anode Material production facility, under development located in Louisiana,
USA.
Materiality
● For the purpose of our audit we used overall Group materiality of US$4.3 million, which represents
approximately 1% of the Group’s Total Assets.
● We applied this threshold, together with qualitative considerations, to determine the scope of our audit and
the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements on the
financial report as a whole.
● We chose the Group's total assets because, in our view, it is the benchmark against which the
performance of the Group is most commonly measured, given the current levels of production at the
Balama Graphite Operation and the Vadalia Active Anode Material project being under development.
● We utilised a 1% threshold based on our professional judgement, noting it is within the range of commonly
acceptable thresholds.
Audit Scope
● Our audit focused on where the Group made subjective judgements; for example, significant accounting
estimates involving assumptions and inherently uncertain future events.
● The Australian Group engagement team directed the involvement of the Mozambican component audit
team, which performed an audit of the financial information of Twigg Exploration & Mining Limitada, given
its financial significance to the Group. All other components of the Group are audited by the Australian
Group engagement team.
99
● We determined the nature, timing and extent of work that needed to be performed by the Mozambican
component auditor operating under our instruction. We determined the level of involvement we needed to
have in the audit work performed by the component auditor to enable us to conclude whether sufficient
appropriate audit evidence had been obtained. Our involvement included discussions, written instructions
and inspecting a selection of their workpapers.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. The key audit matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. Further, any commentary on the outcomes of a
particular audit procedure is made in that context. We communicated the key audit matters to the Audit
and Risk Committee.
Key audit matter
How our audit addressed the key audit matter
Carrying value of non-current assets
(Refer to note 9b & 9e) [US$313.3 million]
We performed the following procedures, amongst
others:
As at 31 December 2021, the Group recognised
US$180.5 million of Property, Plant and Equipment
and US$132.8 million of Mining Assets (together ‘the
mining assets’).
● Evaluated the Group’s assessment of impairment
indicators, including the conclusions reached,
taking into consideration the requirements of
Australian Accounting Standards.
As required under AASB 136 Impairment of assets,
each period the Group assesses all non-current asset
balances for indicators of impairment. In the current
period, the Group performed its assessment and
concluded that no impairment indicators existed for
either of its Cash Generating Units (CGUs), being the
Balama Graphite Operation (Balama) and the Vidalia
Active Anode Material project (Vidalia).
This was a key audit matter because of the
judgement involved in assessing impairment
indicators and the financial significance of the
carrying value of the Group’s mining assets.
● Compared the value of net assets of the Group at
31 December 2021 to the Group’s market
capitalisation.
●
●
In relation to the Balama CGU, we considered
whether conditions underlying key valuation
assumptions had improved or deteriorated since
the impairment test performed in the prior period.
In relation to the Vidalia CGU, we obtained
evidence of the Board approved final investment
decision on the initial expansion of its active
anode material facility in Louisiana, USA. We
also obtained the binding active anode material
offtake agreement for a large portion of the
throughput of the expanded Vidalia facility, which
was executed during the year.
● We evaluated the reasonableness of the
disclosures included within the consolidated
financial statements, in light of the requirements
of Australian Accounting Standards.
100
SYRAH RESOURCES > ANNUAL REPORT 2021
Key audit matter
How our audit addressed the key audit matter
Decommissioning and restoration provision
(Refer to note 9e) [US$15.0 million]
As a result of its mining and processing operations
the Group is obliged to restore and rehabilitate the
land disturbed by its operations. Rehabilitation
activities are governed by a combination of legislative
and operating licence requirements. As at 31
December 2021 the consolidated statement of
financial position included non-current provisions for
decommissioning and restoration of US$15.0 million.
This was a key audit matter given the determination
of these provisions required judgement by the Group
in the assessment of the nature and extent of future
works to be performed, the future cost of performing
the works, the timing of when the decommissioning
and restoration activities will take place and economic
assumptions, such as the discount rate and inflation
rates, applied to forecast future cash outflows
associated with the decommissioning and restoration
activities to bring them to their present value.
We obtained the Group’s assessment of their
obligations to rehabilitate disturbed areas at the
Balama Graphite Operation (Balama) and the
estimated future cost of that work, which forms the
basis for the provision calculation (the model). We
evaluated and tested significant assumptions utilised
in the model by performing the following procedures,
amongst others:
● Evaluated the Group’s decommissioning and
restoration cost forecast, including the process
by which they were developed.
● Considered the competence, capabilities and
objectivity of the external expert who created the
Group’s closure plan and the assessment of the
decommissioning and restoration costs at the
Balama Graphite Operation.
● Compared the Group’s assumptions on the cost
of rehabilitation activities, on a sample basis, to
the cost of other similar activities at the mine site.
● Considered the appropriateness of the discount
rate and inflation rate utilised in calculating the
provision by comparing them to current market
consensus rates.
● Checked the mathematical accuracy of the
model.
● Checked whether the timing of the cash flows in
the model were consistent with current life of
mine plans and rehabilitation plans submitted to
relevant authorities for the mine site.
● Considered the reasonableness of the
decommissioning and restoration provision
disclosures included within the consolidated
financial statements, in light of the requirements
of Australian Accounting Standards.
101
Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report for the year ended 31 December 2021, but does not include
the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing
and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our
auditor's report.
102
SYRAH RESOURCES > ANNUAL REPORT 2021
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 23 to 48 of the directors’ report for the
year ended 31 December 2021.
In our opinion, the remuneration report of Syrah Resources Limited for the year ended 31 December
2021 complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the remuneration report, based on our audit conducted in accordance with
Australian Auditing Standards.
PricewaterhouseCoopers
Ben Gargett
Partner
Melbourne
24 March 2022
103
ADDITIONAL ASX INFORMATION
Additional information required by the Australian Securities Exchange Limited and not shown elsewhere in this report is as
follows. The shareholder information set out below was applicable as at 17 March 2022 except where otherwise indicated.
EQUITY SECURITY HOLDERS
TOP 20 LARGEST QUOTED SECURITY HOLDERS AS AT 17 MARCH 2022
The names of the twenty largest security holders of quoted equity securities are listed below:
RANK NAME
1.
2.
3.
4.
5.
6.
7.
8.
9.
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
UBS NOMINEES PTY LTD
BNP PARIBAS NOMS PTY LTD
NATIONAL NOMINEES LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
COPPER STRIKE
BNP PARIBAS NOMINEES PTY LTD
10. MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
11.
12.
13.
14.
CS THIRD NOMINEES PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM
BNP PARIBAS NOMINEES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
15. MASFEN SECURITIES LIMITED
16.
17.
BNP PARIBAS NOMS (NZ) LTD
BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD
18. MR GREGORY JAMES ROBINSON
19.
20.
NETWEALTH INVESTMENTS LIMITED
CS FOURTH NOMINEES PTY LIMITED
UNITS
188,606,395
% OF UNITS
28.19
87,579,284
77,916,635
28,745,862
17,827,827
13,716,234
10,818,181
9,141,369
5,876,465
5,559,800
5,148,545
2,750,149
2,640,481
2,432,403
2,092,117
1,449,117
1,438,830
1,100,000
1,097,937
1,078,577
13.09
11.64
4.30
2.66
2.05
1.62
1.37
0.88
0.83
0.77
0.41
0.39
0.36
0.31
0.22
0.22
0.16
0.16
0.16
Totals: Top 20 holders of ORDINARY FULLY PAID SHARES (TOTAL)
Total Remaining Holders Balance
467,016,208
202,115,314
69.79
30.21
104
SYRAH RESOURCES > ANNUAL REPORT 2021 UNQUOTED EQUITY SECURITIES AS AT 17 MARCH 2022
Convertible Note
Performance rights over ordinary shares
Non-Executive Director Share Rights
Unlisted Options
NUMBER ON
ISSUE
2
17,252,179
188,324
600,000
NUMBER OF
HOLDERS
1
26
4
1
SUBSTANTIAL HOLDERS
Substantial holders in the Company, as disclosed in substantial holder notices given to the Company, are set out below:
RANK
1.
NAME
AustralianSuper Pty Ltd
2.
3.
Paradice Investment Management Pty Ltd
Bruce N Gray
UNITS
120,858,162
37,714,532
35,943,668
DISTRIBUTION OF EQUITABLE SECURITIES
Analysis of number of equitable security holders by size of holding as at 17 March 2022:
RANGE
1 – 100
101 – 1,000
1,001 – 10,000
10,001 – 100,000
>100,001
Rounding
Total
Holding less than a marketable parcel
UNLISTED OPTIONS
RANGE
1 – 100
101 – 1,000
1,001 – 10,000
10,001 – 100,000
>100,001
Rounding
Total
Holding less than a marketable parcel
TOTAL HOLDERS
3,171
4,280
1,814
3,061
355
12,681
1,002
UNITS
1,704,232
11,832,335
14,153,625
92,968,241
548,473,089
669,131,522
168,187
% OF ISSUED CAPITAL
0.25
1.77
2.12
13.89
81.97
0.00
100.00
0.03
TOTAL HOLDERS
-
UNITS
-
% OF ISSUED CAPITAL
-
-
-
-
1
1
-
-
-
-
600,000
600,000
-
-
-
-
100.00
0.00
100.00
-
105
UNLISTED PERFORMANCE RIGHTS
RANGE
1 – 100
101 – 1,000
1,001 – 10,000
10,001 – 100,000
>100,001
Rounding
Total
Holding less than a marketable parcel
TOTAL HOLDERS
-
UNITS
-
% OF ISSUED CAPITAL
-
-
-
14
12
26
-
-
-
2,420,213
14,831,966
17,252,179
-
-
-
14.03
85.97
100.00
-
NON-EXECUTIVE DIRECTOR SHARE RIGHTS
RANGE
1 – 100
101 – 1,000
1,001 – 10,000
10,001 – 100,000
>100,001
Rounding
Total
Holding less than a marketable parcel
CONVERTIBLE NOTES
RANGE
1 – 100
101 – 1,000
1,001 – 10,000
10,001 – 100,000
>100,001
Rounding
Total
Holding less than a marketable parcel
CONVERTIBLE NOTES
AUSTRALIANSUPER PTY LTD AS TRUSTEE FOR
AUSTRALIANSUPER
TOTAL HOLDERS
-
-
1
2
1
4
-
UNITS
-
-
6,318
70,696
111,310
188,324
-
% OF ISSUED CAPITAL
-
-
3.35
37.54
59.11
0.00
100.00
-
TOTAL HOLDERS
1
UNITS
2
% OF ISSUED CAPITAL
100.00
-
-
-
-
1
-
-
-
-
-
2
-
-
-
-
-
0.00
100.00
-
NUMBER HELD
2
% OF TOTAL UNLISTED
CONVERTIBLE NOTES
100.00
106
SYRAH RESOURCES > ANNUAL REPORT 2021 VOTING RIGHTS
The voting rights attached to each class of equity security are set out below:
Ordinary Shares
On a show of hands every member present in person or by proxy shall have one vote and upon a poll each share shall have
one vote.
Unlisted Performance Rights
There are no voting rights attached to unlisted performance rights.
Non-Executive Director Share Rights
There are no voting rights attached to Non-Executive Director Share Rights.
Unlisted Options
There are no voting rights attached to unlisted options.
Convertible Notes
There are no voting rights attached to convertible notes.
There are no other classes of equity securities.
ON MARKET BUY BACK
There is currently no on market buy-back in place.
TENEMENT SCHEDULE AS AT 17 MARCH 2022
PROJECT
Balama
LICENSE NUMBER
6432C
LICENSE TYPE
Mining Concession
COUNTRY
Mozambique
INTEREST OWNED
95%
107
Corporate Head Office – Melbourne
Registered Office
Syrah Resources Limited
c/- Vistra Australia (Melbourne) Pty Ltd
Level 4, 96-100 Albert Road
South Melbourne VIC 3205
Telephone: +61 3 9670 7264
Email: enquiries@syrahresources.com.au
Website: www.syrahresources.com.au
Principal Place of Business
Syrah Resources Limited
c/- Work Club Melbourne
Olderfleet
477 Collins Street
Melbourne, VIC 3000
ANNUAL REPORT 2021
For the financial year end 31 December 2021