The Syrah Resources Ltd (ASX: SYR) share price won't be going anywhere on Monday.
This morning the graphite producer requested a trading halt for its shares.
Why is the Syrah share price halted?
The Syrah share price was placed into a trading halt this morning so that it could launch an equity raising.
Syrah is raising funds after its Board approved the final investment decision (FID) on the initial expansion of its Vidalia active anode material (AAM) facility in Louisiana, USA to 11.25ktpa AAM production capacity.
Management notes that the Vidalia FID is a pivotal step in the company's strategy to become a vertically integrated natural graphite AAM supply alternative for USA and European battery supply chain participants OEM customers. It also notes that it establishes Syrah as a first mover as a large-scale vertically integrated natural graphite AAM supply option outside of China.
Construction of the Vidalia facility is scheduled to be completed in the June 2023 quarter. After which, following commissioning, the start of production is expected in the September 2023 quarter with an 18-month ramp-up period to the full estimated 11.25ktpa AAM production rate.
The equity raising
Syrah is undertaking a fully underwritten institutional placement and pro rata accelerated non-renounceable entitlement offer to raise a total of $250 million (US$178 million).
This comprises a fully underwritten placement of new fully paid ordinary shares to eligible institutional shareholders and new institutional investors to raise approximately $125 million, together with a fully underwritten 1 for 5.9 pro rata accelerated non-renounceable entitlement offer of new shares to raise the other $125 million.
These funds will be raised at $1.48 per new share, which represents a 10.3% discount to its last close price.
Syrah's Managing Director and CEO, Shaun Verner, said: "Announcing the Vidalia FID and fully funding the Vidalia Initial Expansion are pivotal steps for Syrah in its history and in its strategy to becoming a vertically integrated producer of natural graphite AAM."
"We now have greater certainty over the project and financing for the Vidalia Initial Expansion and our path to entering the downstream AAM market, with the start of production scheduled for the September 2023 quarter. Further, funds from the Equity Raising will contribute towards studies for potential future expansion of Vidalia to a 45ktpa AAM production capacity and working capital and capital costs at Balama, and ensures that the Company will maintain a strong balance sheet," he added.
