Syrah Resources : June Quarterly Activities and Cashflow Report

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21 July 2022

ASX Announcement / Media Release

Quarterly Activities Report - Period Ended 30 June 2022

Key Points

• Total Recordable Injury Frequency Rate ("TRIFR") of 0.8 for Balama and 17.1 for Vidalia at quarter end
• Demand growth for Balama natural graphite end uses, with global electric vehicle ("EV") sales up 51% in June 2022 quarter, versus the June 2021 quarter, to approximately 2.2 million units1 and Chinese anode production increasing to above 100kt per month in the June 2022 quarter2
• Balama produced 44kt natural graphite at 79% recovery with 44kt sold and shipped during quarter
• Balama C1 cash costs (FOB Nacala/Pemba) of US$543 per tonne
• Weighted average sales price increased to US$662 per tonne (CIF)
• Two ~10kt spot breakbulk shipments from Pemba port completed in the June 2022 quarter
• Significant forward sales order book of nearly 90kt natural graphite, demonstrating robust underlying demand conditions
• Detailed engineering on the initial expansion of Vidalia AAM facility to 11.25ktpa AAM production capacity ("Vidalia Initial Expansion") more than 76% completed
• Construction of Vidalia Initial Expansion project advancing within the planned schedule and budget
• 11.25ktpa AAM Vidalia facility targeted to start production in the September 2023 quarter
• Definitive Feasibility Study ("DFS") on the expansion of Vidalia's production capacity to at least
  45ktpa AAM, inclusive of 11.25ktpa AAM, well underway and to be completed in 2022
• Entered into memorandum of understanding with Mitsubishi Chemicals Company to develop to new AAM products and localised production facilities in US and Europe.
• Exploring expansion of downstream business into Europe and commenced process for development of a large-scale AAM facility in the European Union potentially through partnership
• Conditional Commitment 3 offered by the US Department of Energy ("DOE") for an Advanced Technology Vehicles Manufacturing loan to support the financing of the Vidalia Initial Expansion project4. Syrah and DOE targeting signing of a binding loan in the September 2022 quarter
• Quarter end cash balance of US$168 million.

1. Source: LMC. June 2022 includes Syrah's estimate for EV sales in selected countries (~144k total).
2. Source: ICCSino.
3. A Conditional Commitment is offered by DOE prior to issuing a loan and indicates that DOE expects to support the Vidalia Initial Expansion project, subject to the satisfaction of certain conditions including fulfilling remaining legal, contractual, and financial requirements.
4. Refer ASX release 19 April 2022.

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Balama Graphite Operation ("Balama") - Mozambique

Syrah Resources Limited (ASX: SYR) ("Syrah" or "Company") recorded a TRIFR of 0.8 at quarter end

for Balama.

Balama produced 44kt natural graphite for the quarter at approximately 15kt per month, on average. Maximum finished product inventory positions and ongoing disruption in the global container shipping market continued to prevent Balama operating at a production rate above 15kt per month. Syrah achieved strong operational performance with consistent product quality, stable grade and higher recovery. During the quarter, Balama average and maximum daily production run-rates were 18kt per month and 27kt per month, respectively, during campaign production runs. Plant recovery was 79%, an improvement on the March 2022 quarter and materially higher than when Balama operated at an equivalent monthly production rate in 2019. With the commissioning and optimisation of a cyclone system in the secondary milling circuit, the Company is confident that recovery can be sustained at 80% or above.

Balama C1 cash costs (FOB Nacala/Pemba) for the quarter were US$543 per tonne. Higher diesel and consumables costs, additional ex-mine gate logistics costs for Pemba breakbulk shipments and one-off maintenance costs led to higher unit cash costs for the quarter. Due to potentially sustained increases in certain operating costs, Syrah is reviewing Balama C1 cash cost guidance at a 15kt per month production rate. Balama C1 cash costs are expected to reduce as production rate increases beyond 15kt per month with improved shipping options and availability and as improvement initiatives are embedded.

Following a competitive tender process, Syrah selected Tayanna Mocambique SA ("Tayanna"), its existing service provider, for Balama contract mining services over a five-year term commencing in the June 2022 quarter. Tayanna will utilise new equipment to improve productivity of Balama mining activities and the Company expects to achieve improved performance and lower mining costs under the new mining services contract.

In April 2022, Syrah took a final investment decision on the installation of a 11.25 MWp solar photovoltaic installation combined with an 8.5 MW/MWh battery energy storage system ("Solar

5 TGC = Total Graphitic Carbon.

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Battery System") at Balama 6 under a build-own-operate-transfer arrangement. The Solar Battery System is progressing on schedule, with earthworks nearing completion and fence installation and piling activities commencing. The Solar Battery System is scheduled to be commissioned in the March 2023 quarter.

At quarter end, Balama employees totalled 482 excluding contractors, with hiring prioritising essential and critical roles. Rates of Mozambican national employment, local host community and female employment were 96%, 37% and 18%, respectively, of Balama's total labour contingent excluding contractors.

Syrah suspended logistics and personnel movements to and from Balama for seven days in June 2022, as a precautionary measure due to insurgent activity in the Ancuabe region of Cabo Delgado province 7 . Syrah's operations, employees and contractors were not impacted, with the issues occurring more than 200km from Balama mine site and more than 30km from the N1 road. Logistics and personnel movements recommenced following a review of security, based on direct monitoring and security assessments from qualified third parties8. The N1 road has remained open and Balama logistics and personnel movements on this road have continued without interruption since 17 June 2022. Syrah's highest priority is the health and safety of employees and contractors. The Company's present security procedures at Balama are deemed appropriate.

Natural Graphite Sales and Marketing

Natural graphite sales for the quarter were 44kt with all 30kt finished product inventory contracted to customers. Container shipping market disruption caused by continuing COVID-19 port and logistics restrictions and global trade imbalances is impacting the Company's ability to secure desired container capacity for Balama shipments from Nacala, and to meet very strong underlying customer demand. Syrah is using breakbulk shipments from Pemba to supplement container shipments.

The weighted average sales price of natural graphite sales for the quarter was US$662 per tonne (CIF). Fines sales accounted for approximately 86% of overall product sales. Fines market pricing increased through the quarter with record downstream anode demand and have been stable despite higher Chinese natural graphite production. Coarse flake prices ex-China remained strong due to industrial demand growth and ongoing supply disruptions, including from Ukraine and Russia. Sea

1. Refer ASX release 6 April 2022.
2. Refer ASX release 9 June 2022.
3. Refer ASX release 17 June 2022.
4. Finished product inventory includes saleable inventory at Balama, Nacala, Pemba and USA.

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freight rate volatility and surcharges remain with Syrah's average shipping unit costs during the quarter at approximately four times the long-term average.

Strong forward demand for Balama's high quality products has continued through the June 2022 quarter highlighted by Syrah's significant order book. Demand is consistent with strong growth in global EV demand, increasing Chinese anode production, Syrah's primary customer segment, and positive conditions in ex-China carbon markets particularly in Europe. Syrah expects the coarse flake market in Asia to be balanced in the September 2022 quarter. Robust forward contracting with end- user customers is underpinning nearly 90kt of natural graphite forward sales orders.

Natural graphite production from major processing facilities in China continue to be challenging due to environmental issues, remedial actions, recertification efforts and COVID-19 related logistics interruptions. Chinese natural graphite production constraints is evident, with higher Chinese natural graphite imports required to satisfy demand, and Syrah's forward sales orders indicate customer concern regarding Chinese natural graphite production availability and market balance. Chinese natural graphite inventory positions remain low due to the disruption in Chinese production and the challenges in the shipping market hindering higher natural graphite imports into China. Continuing record monthly Chinese anode production rates, in conjunction with supply disruptions and bottlenecks, is driving very strong demand and supportive pricing from Chinese customers for new sales orders.

During the quarter, Syrah completed two ~10kt spot breakbulk shipments through Pemba port. The Company is planning further breakbulk shipments in the September 2022 quarter and will continue to use this export route for Balama products whilst the container shipping market is disrupted. Breakbulk shipments from Pemba create an additional export route for Balama products, provide flexibility in managing inventory positions and will enable significantly higher product sales than otherwise could be achieved solely through Nacala port, given prevailing container availability constraints.

The global container shipping market remained challenging during the June 2022 quarter due to inefficiencies at global ports, Chinese logistics and supply chain disruptions, and trade flow impacts resulting from the Ukraine conflict. Whilst improvement in global freight rates, scheduling reliability and port congestion is evident, East Africa vessel services and container availability are not expected to improve in the September 2022 quarter. Pemba breakbulk shipping rates are expected to reduce with lower freight rates in global container and bulk shipping sectors. The Company continues to work closely with its container shipping service providers through Nacala to secure increased container shipping capacity. The integration of breakbulk shipping through Pemba in combination with expected container shipping availability through Nacala will continue support Balama sales and production of at least 15kt per month.

Vidalia Active Anode Material Facility ("Vidalia") - USA

Syrah recorded a TRIFR of 17.1 at quarter end for Vidalia with a lost time injury sustained by a contractor in May 2022. This was the first recordable injury to occur at Vidalia since June 2020. The injured contractor is expected to make a full recovery.

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The Company made outstanding progress in its strategy to become a vertically integrated natural graphite AAM supply alternative for USA and European battery supply chain participant and OEM customers during the June 2022 quarter and post quarter end.

In February 2022, Syrah's Board approved a final investment decision on the initial expansion of Vidalia to 11.25ktpa AAM production capacity ("FID")10. Construction of the Vidalia Initial Expansion project is progressing within the planned schedule and budget under the management of an integrated Syrah and Worley Group team. Detailed engineering with Worley Group was more than 76% completed at the end of the quarter and will be substantially completed in the September 2022 quarter to maintain sequencing of equipment fabrication and construction activities. Procurement activities accelerated with contracts for key construction services and equipment representing a significant proportion the total installed capital costs of the Vidalia Initial Expansion project awarded. The key construction activities undertaken during the quarter were piling, fencing and installation of infrastructure in readiness for contractors' workforce, and these activities are proceeding on schedule. All overseas fabrication of major equipment is tracking as expected and delivery of this equipment remains on schedule. Significant contracts for mechanical and electrical & instrumentation work packages will be awarded in the September 2022 quarter and other construction contracts will be awarded to maintain the critical path schedule. Construction activities in the September 2022 quarter will focus on completion of civil foundations, mechanical, structural steel and piping manufacturing, and preparing for delivery and installation of major equipment. Construction of the 11.25ktpa AAM Vidalia facility is expected to be completed in the June 2023 quarter and, following commissioning, start of production is targeted in the September 2023 quarter with an 18-monthramp-up period to the full estimated 11.25ktpa AAM production rate.

Syrah has executed an offtake agreement with Tesla, Inc. to supply natural graphite AAM from the 11.25ktpa AAM Vidalia facility11. The Company is advancing commercial and technical engagement with other target customers to develop Vidalia AAM for mass production and secure additional long- term purchase commitments for Vidalia. Syrah expects to announce a commercial development with another tier 1 customer in the September 2022 quarter. Syrah is engaged with multiple target battery supply chain participant and auto OEM customers on qualification, and iterative testing programs are progressing with key target customers. Market growth and segmentation (e.g. localisation / ESG) is expected to benefit Syrah in its commercial engagements with target customers for the 3.25ktpa AAM uncontracted volume from the 11.25ktpa AAM Vidalia facility. Accordingly, Syrah is aiming to secure additional AAM offtake agreements with target customers, at AAM prices consistent with or better than assumed for the Vidalia FID, prior to start of production of the 11.25ktpa AAM Vidalia facility.

Syrah's wholly owned and integrated spherical, purification and furnace operation at Vidalia, which uses natural graphite from Balama, is the only vertically integrated and commercial scale AAM supply source outside China and is continuing to produce 18-micron and 12-micron AAM as required for testing and qualification.

1. Refer ASX release 7 February 2022.
2. Refer ASX releases 23 December 2021 and 29 December 2021.

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