Note: As with most of my posts, preferably please click links only at end if you want more info or it might get too confusing (Links are given for further info purpose only)
I already mentioned there that FMG was/is a Chinese centric company and so the theory of companies with Chinese customers not get funding, has been addressed by me IMO. I’ve elaborated much more on that topic there and won’t address it here again.
Today, I’m going to try to analyse some of those potential funding options. Needless to say, this is not to say that funding has been or will be received but I’m just trying to see what are the potential options and whether there could be some logic to those assumptions. I’m just trying to think ahead – so please don’t rush to buy TON thinking that funding will be received for sure. PLEASE DO NOT GET ANY HOPES UP BECAUSE THESE ARE JUST POSSIBILITIES.
Many thanks to @Hemmo who sparked off these thoughts in my mind by his comment to me some days back “Great post again OZ. Was thinking now that the new company has officially been signed off what are your thoughts on fundingfor the factory in China.I was thinking that under the new JV Hubei Xingshan Triton Technologies Pty Ltd (HXTT)” they may source funding for this project together. This is probably already being sourced and we may hear about this soon. Just a thought.” - @Hemmo
Hemmo is very right IMO and in fact, there is a good chance that funding will actually be received project wise. The China JV is already a separate registered company and it is highly likely that funding will be obtained project wise.
B) POTENTIAL FUNDING SOURCES
Let us try to understand the various potential sources of funding again –
1) Potential UK financing through Alan Jenks contacts - As explained, AJ has a lot of contacts in the UK. I would assume that due to the influence of AJ, these contacts might be interested in funding TON at any level in the form of debt and/or equity
2) Alterna – Refer point 7 - Alterna Capital acquired a 40% equity interest in AMG Graphite in 2015 by way of a capital increase. This may or may not get a potential investor for us down the line.
3) Forrest - Detailed association of Forrest has been explained by me in the link.
I would assume that if he was interested, then equity funding at the overall level would be the best thing we could hope for.
In our AMG analysis, we saw that they have secured and in final contracting stage for project financing from DEG (a subsidiary of KfW) – AMG has also secured German funding. Association with AMG could also lead to additional contacts for TON for potential German funding for other projects.
The best bet of course would be debt funding for the Ancuabe project. AMG themselves could help us negotiate in this respect.
In same point 18 of AMG analysis mentioned above, we saw AMG mention that operations were to commence in Q2 2016. Thus TON could end up having revenue next year if this works out as per what AMG mentioned in their presentation.
Obviously, this would be a source of revenue and funding to the TON at the company level as a whole
7) YXGC China JV revenue in initial years with minimal participation by TON – Just analysed over the weekend in points 2 and 3
The JV is expected to commence initial production of enhanced graphite products in 2016. This will provide TON the benefit of an early income stream and the production is not dependent on bringing online TON’s Mozambique graphite projects, as YXGC can source enough flake graphite locally to meet the needs of the new factory, for the first few years.
http://hotcopper.com.au/threads/ann...jects-update.2572385/page-66?post_id=15811901 @jackarooz has in the past mentioned that is would be good if we get some sort of pre-sale of graphite. I too have commented in the past that it would be good if YXGC puts in more capital/funds initially taking into consideration, we are a company starting off. So even if something different is happening with the same result, and the JV gets income initially with less participation from TON (as the JV would source local Chinese flake graphite), it would be great for TON as a source of funding from the JV.
Obviously, this revenue stream could be used for TON at the overall company level
8) SQZG – There has been no news of SQZG from TON lately. As mentioned by @toohug01 in his excellent post today, BB told him that Shenzhen has recently had a change of management, and this may have potentially caused a delay at their end.
Also, as he mentioned, - there is no real change and hence no news to report on this front.
Seriously amazed at some of the critics – does anyone really expect TON to come out in their progress report saying that there is nothing to report as there is no news. Obviously, we need to use some common sense that when something materializes, it will be reported.
But, if the SQZG finance deal works out, it is great. Obviously, this funding could be used at the company level as a whole
Regional Chinese government seems very keen to push ahead with the YXGC China JV. If funding were really to be an issue later on for the China JV, then this could always be one option for that JV
10) Chinese financiers – Like I discussed, the China JV seems to be YXGC’s pet project. It is very likely that they themselves will push for financing through Chinese financiers for the YXGC JV
Obviously early days, but potential equity / debt financing cannot be ruled out. I would assume that if it happens, it would be for the Mozambique JV with YXGC only and much later
12) Others - @Pauldola has mentioned here in his analysis of UK investor presentation
Brad and Alan have met with 2 large instos in London
One group who they met in London are looking to potentially fund the project.
TON is obviously not sitting and waiting and doing nothing. In fact, I really hope that TON takes nothing for granted but just keeps looking for new customers, new opportunities, new potential financiers, etc. at all times.
I am assuming that any of the potential financiers (as discussed between BB and toohug) would be interested in funding TON at the overall company level in the form of debt/equity
C) PROJECT WISE POTENTIAL FINANCING (SUMMARISED FROM ABOVE ANALYSIS)
So to summarise, let us see the projects and their potential financiers –
a) Ancuabe project- AMG has clearly mentioned their plans in their presentation to go ahead with Ancuabe next year. So I can’t see how his is not going to go through. It might take time but chance of going through seem strong. Potential financiers -
2) Alterna
5) Potential German financing – DEG/ KFW etc. – Refer point 18 If there are any issues with financing, AMG with its great reputation should be able to assist. So, I’m not really expecting any issues whatsoever with funding for the Ancuabe project
b) Chinese JV with YXGC
Just like the Ancuabe projet, the YXGC China JV should also have no too many hurdles thanks to it being YXGC’s pet project and thanks to China regional government support. Potential financiers –
9) Chinese regional government
10) Chinese financiers
So, I’m not really expecting any issues with funding for the YXGC China JV vertical integration project too
c) Mozambique JV with YXGC
It is still early days but this project is likely going to go ahead last. I would assume that we should have some income by then.
Potential funding -
6) Ancuabe revenue -
7) YXGC China JV revenue in initial years with minimal participation by TON
11) African financiers
d) Nicanda project /TON overall company level – So obviously, the main focus is mainly the Nicanda financing. This is of course the most important one no doubt, and I just handled the easier/more likely ones above first so that we can focus on this one. But, we do indeed have lots of potential financing here, as discussed earlier -
1)Potential UK financing through Alan Jenks contacts
2) Alterna
3) Forrest
4) Others through Chris Catlow’s past association with FMG
6) Ancuabe revenue -
7) YXGC China JV revenue in initial years with minimal participation by TON
8) SQZG
10) Chinese financiers
12) Others -
Please check my points in Part (B) to see if I've accidentally placed any wrong in point C. I just copied it to get a quick glance in part (C) above
D)CONCLUSION –
Once more guys. This is my best interpretation of how potential funding sources can be broken down project wise. There is no guarantee that all this or even any of this might materialize. So this is not a suggestion to buy any shares of TON at all. Please remember that.
I’m just trying to look ahead and make my best effort to break down the topic of financing into smaller parts so that I can focus on any further issues.
Just a small note on the share price- Yeah sure, I’d like TON to be 1$, 2$ or more right now but Rome was not built in a day. We cannot expect the management to manufacture news for us. Personally, I’m least bothered as to whether or not there is any news and a part of me is even hoping that there is no news for a long time, because it would then ensure that there is a flurry of news at one time eventually, leading to a much sharper rise. In the meantime, I always have an option to top up, cash balance permitting of course, as weaker hands exit TON.
Shares go up and shares go down. This is part of the game. Management is attempting to build a company that could potentially be a life changing decision for patient shareholders. I titled my very first analysis many months back in March as “TON – one of best long term investments” because that is the only way I see it.
I would be very disappointed if management were to change their approach to pacify us on a day to day basis and am hoping that they continue focusing on building a great life changing longer term project.
Cheers
TON Price at posting:
26.5¢ Sentiment: None Disclosure: Held
