Syrah Resources : 31 December 2021 Annual Report

CHAIRMAN'S LETTER

2021 has been a year of transition at Balama and milestones at Vidalia, culminating in the announcement of an offtake agreement for AAM from our Vidalia facility. In my 2020 Chairman's letter I outlined the focus areas for 2021 of strengthening Balama's position in the global natural graphite market following a restart decision and making progress on our vision to become a vertically integrated supplier of natural graphite AAM to ex-Asia markets through the development of a large- scale Vidalia AAM facility. The Company has made very

personalExceptional progress was made in advancing Syrah's downstream strategy at Vidalia in Louisiana, with

significant milestones announced in 2021 and after year end. The Company commenced fully integrated production of on-specification AAM from Vidalia,

Forfollowing the installation and commissioning of a

c mmercial scale furnace on site. Syrah's capability to process natural graphite first to on-specification an de precursor material and now to on-specification AAM has been paramount in Syrah's qualification processes with target AAM customers. Syrah awarded Worley Group a detailed engineering and procurement services contract for the Vidalia Initial Expansion project, and detailed engineering on this project

was 50% completed by year end. Importantly, Syrah entered into an offtake agreement with Tesla, Inc for AAM from Vidalia, which provided a very strong foundation for the Company to take a final investment decision on the Vidalia Initial Expansion project and the

final investment decision was approved by the Syrah Board after year end.

Mozambique has continued to be a country where operating conditions are excellent and our workforce, who are predominantly local, are outstanding. The Company has not wavered in its commitment to be a good corporate citizen in Mozambique and to the host communities, with commitments to ongoing community projects under the Livelihood Development Program, promotion of health awareness and COVID-19 vaccination campaigns in the community, and alignment to leading practice Environmental, Social and Governance ("ESG") frameworks. The Vidalia Initial Expansion project will provide clear economic benefits to Concordia Parish in Louisiana and Syrah is proactively engaging with its community to ensure this project is well supported.

The A$250 million equity raising completed after year end ensures that the Vidalia Initial Expansion project is fully funded to the start of production and the Company maintains a sustainable financial position through a variety of natural graphite and shipping market conditions. Syrah is well capitalised to deliver its vision and growth strategy.

Finally, the Board thanks our management team for all that Syrah has achieved in 2021. It was an important time for the Company with production at the world- class Balama Graphite Operation recommenced, the AAM offtake agreement executed and the final investment decision for the Vidalia Initial Expansion project taken post year end. A successful transition of operations at Balama to higher capacity utilisation and further de-risking of Vidalia's development are the key focus areas in 2022 and are aligned with the Board's objective to maximise returns to stakeholders.

Jim Askew

Chairman

For personal use only

It is my privilege to present the 2021 Syrah Annual Report to shareholders. 2021 was an important period, re-positioning the Company at a transformative point for the industry. There were positive developments at Balama, excellent progress in our downstream strategy to become a vertically integrated producer of natural graphite AAM and remarkable growth in Syrah's end- use markets.

Our health, safety and environment performance was outstanding. Total Recordable Injury Frequency Rate at Balama and Vidalia were 0.5 and 0.0, respectively, at year end and Balama TRIFR has remained below 1 since late 2018. Our commitment to ESG best practices has been recognised with Syrah achieving ISO recertification for Health, Safety and Environmental Management Systems at Balama and ISO certification for the Quality Management System at Vidalia during the year.

Since the beginning of the pandemic, Syrah has had robust COVID-19 protocols in place across the business. After a significant period free of COVID interruption, in the latter part of 2021 a number of employees and contractors at Balama tested positive to COVID-19. The protocols in place at Balama contained transmission both on-site and through the community, and ensured that operational continuity was maintained. We also completed a COVID-19 vaccination program for Syrah employees and contractors in December 2021 with 97% participation, and a vaccination program for the broader Balama community is being completed to boost vaccination rates. The health, wellbeing and safety of employees and contractors remains Syrah's highest priority.

Continuing to develop our differentiated ESG position, an independent lifecycle assessment ("LCA") of Syrah's integrated operations, from Balama origin to Vidalia AAM customer gate, was completed by Minviro Ltd

in accordance with ISO standards. LCA is a globally recognized and scientifically validated methodology to quantify direct and embodied environmental impacts along the life cycle of a product or process. The LCA estimated that Syrah's operations exhibit materially lower global warming potential, or product carbon equivalent emissions, compared with a representative natural graphite, natural graphite AAM and synthetic graphite AAM suppliers in China. The Company is advancing specific projects, including a solar and battery system at Balama, and evaluating opportunities to further reduce the environmental impacts of its operations.

In March 2021, production recommenced at Balama following an approximately 12-month production suspension period due to the market and logistics disruptions caused by COVID-19. The recommencement of Balama production was executed extremely well and ahead of schedule. The global container shipping industry disruption has constrained Balama sales, and production, due to maximum inventory positions being reached at Balama and Nacala. However, there are many positives to take away from Balama operations during 2021. Operational performance through the year was impressive, there was a material improvement in quality and graphite recoveries, and high production rates were achieved in campaign runs. Target unit costs were achieved, embedding improvements and the restructure undertaken during the suspension period. Rehiring at Balama has been successful with Syrah reinstating most of its planned labour and contractor contingent with high local host community and female representation.

Whilst Syrah expects container shipping availability to improve, late in 2021 action was taken to improve sales and alleviate the inventory constraint on production through the implementation of breakbulk shipping to supplement container deliveries. Since the conclusion of the year, the first breakbulk shipment through Pemba port has been loaded. Exporting breakbulk from Pemba creates an additional export option for Balama products and provides the Company flexibility in managing logistics to allow significantly higher product sales than otherwise could be achieved solely through Nacala port, and accordingly higher Balama production.

Syrah took significant steps forward in our downstream strategy with a material offtake agreement being announced with Tesla, Inc and the successful conclusion of an array of work streams providing the basis for the Syrah Board to approve a final investment decision for the Vidalia Initial Expansion project after year end. This decision was the culmination of over six years of product and technology development, product testing, community, customer and other stakeholder engagement, as well as feasibility, engineering and procurement preparation. Syrah is moving strongly towards becoming the pre-eminent ex- Asia vertically integrated natural graphite AAM supply option for battery supply chain participant and Original Equipment Manufacturer ("OEM") customers. The Company is targeting first production from the 11.25kt per annum AAM Vidalia facility in the September