Swiss commodities giant Glencore is understood to have made an informal approach to Syrah Resources that could value the graphite and vanadium junior at as much as to $2 billion.
Melbourne-based Syrah’s prized asset is the mammoth Balama graphite and vanadium deposit in northern Mozambique.
After the Fairfax Media revealed Glencore’s interest on Thursday, the company’s shares surged as much as 25 per cent before it dived into a trading halt before noon. When shares were halted, Syrah’s shares were up 19 per cent at $5.09. The shares have more than doubled in value since touching a 52-week low of $2 on July 10 last year.
Syrah responded promptly to the report and a share price query from the market operator on Thursday afternoon, saying, “From time to time Syrah receives informal,confidential and non-binding enquiries from various parties regarding Syrah’s interest in entering takeover discussions”.
“None of these enquiries have progressed to formal discussions or resulted in any indicative offers being received by Syrah.”
Sources say Ivan Glasenberg’s Glencore, one of the largest producers of primary vanadium in the world, is keen to exert control over the wider vanadium market. Pouncing on Syrah and securing its Balama project would be an early strategic play to shut out fresh competition.
The level of interest from Glencore and others is such that Syrah has also received multiple approaches from investment banks keen to lead a possible takeover defence strategy for the ASX group, which has seen its shares leap 29-fold in the space of three years.
Vanadium plays a critical role in rapidly growing battery markets, and is also an important ingredient in the new world of energy storage.
Fairfax Media understands Glencore approached Syrah to informally convey it would be willing to pay between $1 billion and $2 billion for the company.
But the three men behind the company – chairman Tom Eadie, managing director Paul Kehoe and Tolga Kumova, an executive director – clearly think it could ultimately be worth a lot more than that.
The end game for the directors is the potential of vanadium to make renewable energy economical.
The trio has about 22 per cent of the Syrah register between them, but Mr Kehoe, with 12 per cent, and Mr Kumova, with 9 per cent, are the company’s key shareholders.
Meteoric share price rise
Mr Kehoe’s stake is worth $86.4 million; Mr Kumova, a member of BRW’s Young Rich list, has a stake worth $62.3 million. Shares in Syrah have enjoyed a meteoric rise to $4.30 from about 15¢ in late 2011, with its market capitalisation rising to $715 million from $15 million in that time.
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