Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Syrah Resources' Balama Graphite Resource Hits One Billion Tonnes

Syrah Resources (ASX: SYR) has delivered an big lift in graphite resource at the company's Balama Graphite Project in Mozambique, which now contains 117 million tonnes of graphite - which exceeds the rest of the world's reserves of graphite as calculated by the USGS.

Balama now hosts an Inferred Resource, which includes Balama West and Balama East, of 1.15 billion tonnes at 10.2% Total Graphitic Carbon (NYSEMKT:TGC) and 0.23% V2O5.

Syrah aims for Balama to be the lowest cost and largest producer of graphite in the world, which includes China, and to have a very high grade and quality product for the expanding graphite market.

Another plus for Syrah is that Balama is also considered one of the larger vanadium deposits globally with contained vanadium in resources of 2.6 million tonnes, which is six times the size of Rhovan, the world's largest operating vanadium deposit.

Syrah said that based on the size of the deposit and the product mix achieved from metallurgical testwork, the company believes that Balama could meet demand requirements across all natural graphite flake ranges (jumbo to amorphous) for several generations.

Syrah also expects to achieve premium prices on its product range, due to the low impurities contained in the graphite concentrate.

The key milestone newsflow will continue in the near-term, with Scoping Study results for Balama West are expected in June 2013. Drilling is also underway to upgrade the confidence category to Indicated.

Balama East high grade zone

Balama East's Inferred Resource comprises a very high grade zone surrounded by extensive zones of medium to high grade graphite, which was calculated by the MSA Group.

The resource commences from surface to a depth of 300 metres as follows:

- The high grade Mepiche Zone has an Inferred Resource of 145 million tonnes at 15.1% TGC* and 0.43% V2O5 at a 12% TGC cut off; and
- The global Inferred Resource for Balama East is 579 million tonnes at 10.6% TGC and 0.26% V2O5 at a 5% TGC cut off.

Highlighting how Syrah has continued to develop the resource at Balama East in a relatively short space of time, the Inferred Resource is well-above the Exploration Target of 300-400 million tonnes at 11% TGC and 0.3% V2O5, announced in the December quarter 2012.

There is also the potential for the resource to continue to grow, as mineralisation remains open in several directions.

Syrah heads to China

Recently Syrah representatives visited China and met with the largest buyer of V2O5 in that country. They were informed that vanadium mines in China process amorphous graphite to extract vanadium from roscoelite at a head grade as low as 0.10% V2O5.

As Syrah has been hampered by the slow turnaround time of the laboratory in South Africa that was performing metallurgical testwork, the Company has identified an alternative organisation to carry out the extensive work which is expected to be completed in the third quarter of 2013.

Syrah aims for Balama to be the lowest cost and largest producer of graphite in the world, which includes China, and to have a very high grade and quality product for the expanding graphite market.

Another plus for Syrah is that Balama is also considered one of the larger vanadium deposits globally with contained vanadium in resources of 2.6 million tonnes, which is six times the size of Rhovan, the world's largest operating vanadium deposit.

Syrah said that based on the size of the deposit and the product mix achieved from metallurgical testwork, the company believes that Balama could meet demand requirements across all natural graphite flake ranges (jumbo to amorphous) for several generations.

Syrah also expects to achieve premium prices on its product range, due to the low impurities contained in the graphite concentrate.

The key milestone newsflow will continue in the near-term, with Scoping Study results for Balama West are expected in June 2013. Drilling is also underway to upgrade the confidence category to Indicated.

Balama East high grade zone

Balama East's Inferred Resource comprises a very high grade zone surrounded by extensive zones of medium to high grade graphite, which was calculated by the MSA Group.

The resource commences from surface to a depth of 300 metres as follows:

- The high grade Mepiche Zone has an Inferred Resource of 145 million tonnes at 15.1% TGC* and 0.43% V2O5 at a 12% TGC cut off; and
- The global Inferred Resource for Balama East is 579 million tonnes at 10.6% TGC and 0.26% V2O5 at a 5% TGC cut off.

Highlighting how Syrah has continued to develop the resource at Balama East in a relatively short space of time, the Inferred Resource is well-above the Exploration Target of 300-400 million tonnes at 11% TGC and 0.3% V2O5, announced in the December quarter 2012.

There is also the potential for the resource to continue to grow, as mineralisation remains open in several directions.

Syrah heads to China

Recently Syrah representatives visited China and met with the largest buyer of V2O5 in that country. They were informed that vanadium mines in China process amorphous graphite to extract vanadium from roscoelite at a head grade as low as 0.10% V2O5.

As Syrah has been hampered by the slow turnaround time of the laboratory in South Africa that was performing metallurgical testwork, the Company has identified an alternative organisation to carry out the extensive work which is expected to be completed in the third quarter of 2013.

Analysis

With Syrah now surpassing one billion tonnes of graphite resource at Balama, the company has further enhanced the project as hosting the largest graphite resource in the world.

The Scoping Study for Balama West in due in June 2013, with these results having the potential to provide a re-rating in the share price depending on the outcome of the OPEX and CAPEX.

With Syrah aiming to be the lowest cost and largest producer of graphite in the world, Proactive Investors considers the recent re-tracement in the share price to provide an opportunity for investors to gain, or increase exposure to the stock, with our near-term price target $2.20.