Syrah Resources Limited’s (ASX: SYR) wholly owned subsidiary, Syrah Technologies, LLC, has finalised a non-binding term sheet and been offered a Conditional Commitment for a US$107 million loan from the US Department of Energy.
The US Government Electric Vehicle “critical minerals” loan would fund the initial expansion of its Vidalia active anode material (AAM) facility in Louisiana, USA to 11.25ktpa AAM production capacity.
The proposed loan is to be made under DOE’s Advanced Technology Vehicles Manufacturing (ATVM) loan programme in support of the Biden Administration’s critical minerals strategy.
DOE has US$17.7 billion in uncommitted loan authority under the ATVM programme to support the manufacture of eligible advanced technology vehicles including electric vehicles (EVs), and qualifying components and materials, in the USA.
Domestic processing of critical minerals, such as graphite, for use in EV batteries qualifies for the ATVM loan programme.
Syrah is a first mover in developing a large-scale vertically integrated natural graphite AAM supply option in the USA. If finalised, the loan to Syrah Technologies would be the first from the ATVM loan program since 2011 and the first ever from the ATVM loan programme to a materials processing facility.
Other recipients of funding from the ATVM loan programme include Ford, Nissan and Tesla.
In June 2021, Syrah applied to DOE’s Loans Programs Office for the ATVM loan with due diligence commencing in July 2021. The Loans Programmes Office has subsequently undertaken detailed market, technical and legal due diligence on Syrah, Vidalia and the Vidalia Initial Expansion project using US Government expertise and external specialist consultants.
Under the term sheet, the loan is for a maximum amount of US$107 million with a term of up to approximately 10 years from financial close. Interest on the loan will be fixed from the date of advance for the term of the loan at applicable long-dated US Treasury rates.
The term sheet and Conditional Commitment have been approved by DOE. The company and DOE are targeting financial close of the loan by the end of June 2022 and first advance of the loan in the September 2022 quarter.
Proceeds from Syrah’s fully underwritten institutional placement and pro rata accelerated non-renounceable entitlement offer completed earlier this year are sufficient to fully fund the remaining US$165 million of estimated installed capital costs of the Vidalia Initial Expansion project.
To the extent the DOE loan is drawn, Syrah will use surplus proceeds from the Equity Raising to accelerate studies and detailed engineering of a potential larger expansion of Vidalia, fund construction of such a potential expanded AAM facility at Vidalia, to provide additional balance sheet flexibility to Syrah and/or for capital management initiatives.
Director of DOE’s Loans Programs Office Jigar Shah said the Conditional Commitment offered to Syrah would be for the first ever ATVM loan to support a supply chain manufacturing project and further demonstrates DOE’s commitment to building a strong domestic supply chain for zero emission transportation solutions.
“This reiterates President Biden’s commitment to strengthening US critical mineral supply chains and growing the US workforce to support domestic battery manufacturing for EVs.
“Moreover, the Vidalia Initial Expansion project provides a socially and environmentally responsible US supply chain for graphite, which is critical to accelerating the deployment of batteries to power EVs.”
Syrah Managing Director and CEO Shaun Verner said the finalisation of a term sheet and offer of a Conditional Commitment from DOE for a loan under the ATVM programme highlights Vidalia’s strategic position in the USA and provides strong validation of Syrah, Vidalia and the Vidalia Initial Expansion.
“Importantly, the loan will allow Syrah to accelerate its growth strategy in its downstream business and support the rapidly growing EV and battery supply chain in the USA.”
For further information please visit: https://www.syrahresources.com.au/
