Ann: Entitlement Offer Prospectus-TON.AX, page-44

It is almost impossible to go through all the info which is truly colossal. I’m just listing down some points as I saw them and this is in no way meant to be a detailed summary of the report or a substitution for reading it yourself, in any way. Also strictly my own opinion, and I’ve still got tons more to read.

1/ Terms (Pg 1/333)

We already know the terms from earlier but just to summarise – 131.5 milion shares at 6 cents to raise approx. $7.8 million. 25 million options at 10c for Somers and Minjar. You can subscribe for 1 share for every 4 you own.
Closes on November 14. Things should be starting out soon in early November - so be on alert.

2/  Key info, market caps etc.(Pg 7)

Breakup of shares and other figures given.
At 6 cents, market cap is approx. 40 million Obviously massive scope to  go up.
10c – 65 million; 15 c – 99 million; 20 c – 131 million; 25 c – 165 million; 30 c – 197 million; 35 c – 230 million; 40 c – 263 million, etc. Definitely not suggesting that we will reach any of these, but just wanted to see the market caps at different levels if we indeed do manage to go up, and also to highlight how discounted we are.

3/ Dates (Pg 8)

November 3 is dispatch date and opening date. Closing date is Nov 14. Mentioned that shares quoted on deferred settlement basis on Nov 15. Not sure if that means that we could be back in action on this date but looks like that...subject to conditions being met, I guess

4/ Somers’ holding (Pg 11)

Mentioned that underwriter has 11 million shares, options etc. as of date already. So, Somers definitely have incentive to make sure we do well, in short term at least. This is a good positive from trading angle at least suggesting that TON might be a good buy at the current price.

5/ TON’s 80% grafex interest to be approved by Moz government (Pg 16,22)

Normally this would seem like a small thing but given TON’s bizarre history, nothing is small anymore. Just noticed this and approval has to be obtained. TON has obtained a Moz solicitor report too.

6/ Ancuabe and Nicanda (Pg 17)

Mentioned clearly that Ancuabe is a priority with 50% extra large or jumbo. Mentioned later that Nicanda offers optionality and leverage to a stronger global graphite market. I like the words because that is my thinking too that Nicanda could come into play as an option in a stronger market and IMHO, this option has to be retained. I wish to add clearly however that IMHO  not retaining Nicanda is NOT an option if TON has to do well later, but I agree with the current focus on Ancuabe, so long as we have Nicanda too.

7/ Escrow (PG 18)

Some have already discussed escrow and many want to see some of the new shares in escrow

8/ Contingent capital gains liability (PG 18, 21, 52)

This $6.5 million sword is still over our head. – so beware. Keep in mind that this was one reason for going into VA.
In recent report, it is mentioned that the company has actually gone ahead and booked provision for the same.

9/ Hubei and YXGC claims (Pg 20, 51,85)

Pg 20 – Potential claims from the Chinese joint venture could come about at some time. Less risk as Aussie legal advice says those are not legally binding but some risk nonetheless.

Pg 51 – YXGC had claimed 1 million in damages in March. They could pursue in future too

The risk here is that under Chinese law, they could be having some claim. Now one of the greatest strengths of having Minjar on board is exposure to the Chinese market,and we could be targeting this time to come. So with exposure to China, this claim could be some overhang over TON’s head.
Hubei was the China JV and TON’s capital was 54 million RMB which is yet to be paid up. This could be a potential issue later on

10/ Cash (PG 33)

Need to take a better look but looks like around 4.2 million is for exploration and development and 3.5 million for working capital. So we have some cash for now but we’ll definitely be needing cash later on too.
Cash IMO continues to be a top priority area and IMO should not be taken lightly at all. IMO, if TON goes down again later, cash shortage could again be the reason due to the fact that many liabilities could suddenly come up due to several legal issues unresolved or partly resolved. Cash is still a major risk IMO

11/ Salaries (PG 120)
Salaries given here in case anyone wants a look

12/ CSA global technical assessment report (Pg 103, 132)

TON has sought to clear concerns about our deposits. CSA report seems to be Oct 20

Nicanda  - small reduction in tonnage but no measured resource could be reported
Lots more detailed info on each project

Pg 132 onwards is the report
Ancuabe (PG 136) – 798,000 tonnes of contained graphite
Nicanda west  - 1.97 million tonnes of contained graphite
Nicanda hill (11.1%TGC) – 159 million tonnes of contained graphite – higher grade but smaller flake, as against others

Some conclusions from CSA on Pg 140 suggesting that Ancuabe could be a priority considering flake size etc.

CSA report is huge going ton till pg 236/333. I’ve yet to read the same in detail. Past issues identified are in all probability discussed here in more detail, and TON seem to be following CSA’s recommendations and going the jumbo / Ancuabe route for now

13/ Mozambique solicitor report on tenenments (PG 237)

TON seems to have obtained a report from Moz solicitors too on tenements dated October 20.

14/ BDO investigating accounting report (PG 284)

Date is October 21
TON probably wanted a review by another accountant too, and BDO is a reputed name.

15/ Moz government approval and tax report (PG 314)

Report is dated Oct 18. Moz government approval not needed for this recapitalization (PG 317)

16/ Chinese legal report (PG 319)

Date is October 11
The report is for a due diligence on China JV and implications (PG 321)

17/ Conditions for requotation (PG 330)

Several conditions listed including some legal opinions needed. I’m assuming that is why we had so many legal reports as many were probably a necessity.

18/  Final words

Obviously this is not a full summary (as I'm summarizing a 333 page report in 3 pages ) but some main points.

I covered the main points as we were starting, along with links to pages of main reports at the end of my comment, in case anyone skipped those points, and was unaware that we actually have all those reports in this prospectus itself. I myself just ran through them right now and might have a read later if time permits

Great to see a detailed prospectus with so much information, detailed report annexures, etc. I’m not too sure it is a legal requirement to have all the attached reports (please correct me if I’m wrong) – so if not, then the company has exceeded expectations and great to see some detailed communication from them finally to help us to make a more informed decision. TON might also want to safeguard themselves after the last debacle of having a positive announcement just before VA. Either way - good to see some detailed communication.

I mentioned the dates above to see when they were finalized. Many of them were just around the last week. It would have been nice to get the info as soon as they were out so that we could start reading immediately but still, the delay is not substantial.

Cheers