The market may have pushed notably higher this morning, but the Syrah Resources Ltd (ASX: SYR) share price has missed out on the positive market sentiment after being placed in a trading halt.
Why are Syrah shares in a trading halt?
This morning the graphite producer announced the execution of a convertible note deed and an underwritten entitlement offer to raise approximately $111.6 million.
According to the release, the company aims to raise $55.8 million through a convertible note to be issued, subject to certain conditions, to AustralianSuper, and approximately $55.8 million via a fully underwritten pro rata accelerated non-renounceable entitlement offer.
The latter will be raised at 81 cents per share, representing an ~18% discount to its last close price.
Management advised that the proceeds of the capital raising will provide Syrah with additional liquidity and greater flexibility to tailor the Balama production ramp-up in accordance with global natural graphite demand, enabling orderly price negotiations.
What else was announced?
The trading halt wasn't the only thing that company announced this morning.
In an earlier announcement the company revealed that it has executed a binding agreement with the Gredmann (HK) Limited for sales into China.
According to the release, the agreement will see Syrah's Balama Graphite Operation supply Gredmann with 9,000 tonnes per month of fines natural graphite across a range of fixed carbon grades.
The supply agreement commences this month and will run until December 2021, for a total of 279,000 tonnes.
Whilst management once again opted against revealing pricing terms, it advised that it "provides more attractive payment terms for Syrah than its previous sales contracts."
What is Gredmann?
The release explains that Gredmann is an Asia-focused trading company founded in 1978, with strong expertise in traded industrial product markets.
It has a well-established Chinese sales network across more than 200 products and specialises in trading activities for a range of industrial products and chemicals, as well as the new energy materials supply chain. This includes advanced materials and battery materials.
Syrah's managing director and chief executive officer, Shaun Verner, was pleased with the long-term agreement.
He said: "We are pleased to have entered into this long-term large volume contract with Gredmann. Syrah sees Gredmann's extensive experience and strong presence in China as an excellent platform through which to increase sales volumes and further demonstrate consistency and reliability of supply to this high growth market. Syrah and Gredmann share an aligned approach to customer and market development, and we look forward to a positive relationship."
Elsewhere in the battery materials industry, Galaxy Resources Limited (ASX: GXY) and Orocobre Limited (ASX: ORE) shares have pushed higher in early trade.
