Sydney - Shares in Australia-listed Syrah Resources surged as much as 30 percent on Thursday on speculation that the graphite and vanadium prospector could be in Glencore's sights as a takeover target.
The Australian Financial Review in an online report said Glencore is understood to have made an “informal approach” that could value Syrah at up to A$2 billion ($1.89 billion).
Syrah holds rights over the Balama graphite and vanadium deposit in northern Mozambique and has seen a meteoric rise in its shares over the last two and a half years.
Citing unidentified sources, the report said Glencore, one of the world's largest producers of primary vanadium, is keen to exert control over the wider vanadium market.
Glencore declined to comment on the report.
In a statement, Syrah said only that from time to time it receives informal, confidential and non-binding inquiries from various parties regarding Syrah's interest in entering takeover discussions. None of these inquiries involved formal talks, Syrah said.
Syrah says Balama has an inferred vanadium resource of 1.15 billion tonnes - enough to meet global demand for 50 years.
It is about four times larger than Glencore's Rhovan deposit in South Africa.
In December 2013, the Mozambican government granted Syrah Resources a 25-year mining licence for both graphite and vanadium at Balama.
China dominates production of graphite but is under pressure to reserve more of its output for internal use as demand from the battery sector grows due to the surge in demand for electric cars.
Graphite is a key material in lithium-ion batteries needed to power such vehicles.
Analysis by Shaw Stockbroking forecasts development of vanadium reserves at the mine would add $50-$60 million to the capital cost of the overall project but would produce around 4,000 tonnes of saleable vanadium worth $120 million at today's vanadium price of $30 per kilogram.
Vanadium is primarily used in steelmaking as a rust retardant and hardener.
Syrah stock has climbed from A$0.17 in January 2012 to Thursday's high of A$5.61.
It closed 28 percent up at A$5.49. - Reuters