In morning trade the Syrah Resources Ltd (ASX: SYR) share price has charged higher following the release of an update on its graphite ore reserve and mineral resource estimates for the Balama Graphite Operation.
At the time of writing the graphite miner's shares are up almost 4% to $1.11.
What was in the update?
According to the release, the mineral resource estimate for the Balama operation has been upgraded by 19% to 1,423Mt at an average grade of 10% total graphitic carbon (TGC). This compares to its previous estimate of 1,191 Mt at an average grade of 11% TGC.
However, due to the lower grade this works out to be 146.7Mt of graphite, which is only 14% higher than the 128.5Mt of graphite in its previous estimate.
Management has also advised that its ore reserve has been reduced slightly to 113.3 Mt at 16.36% TGC. This was due to operational depletion offset by lowering the reserve cut-off grade from 9% to 7.2% TGC.
In addition to this, the reserve has been reclassified from Proved to Probable due to changes in assumptions based on production and recovery, performance to September 2018, and weighted average price.
In respect to its recoveries, management has revealed that the processing plant is planned to progress to a recovery of 87% of the graphite in the feed by 2021, compared to its previous target of 92.5%.
This revision was based on "lessons learned from an operational plant compared to previous test work."
Should you invest?
Overall, whilst I felt this was a bit of a mixed bag, it appears to have already been priced into its shares.
But I wouldn't be a buyer of its shares just yet. Due to the high level of short interest and weakening demand for battery making ingredients, I would stay clear of Syrah and lithium miners Galaxy Resources Limited (ASX: GXY) and Orocobre Limited (ASX: ORE) until market dynamics improve greatly.
