TON (ASX) Ann: AGM Presentation

Originally posted by ozpolarbear ↑

Apologies for delayed comment as I had other commitments. Below is my best interpretation of some of the events at today’s meeting. Please note that it could be subject to errors, personal subjective opinion, etc and should not be relied upon to make any decision about TON. As I also mentioned, I have been open to selling at an instant and being in and out of TON as the need arises; so no comment of mine should be interpreted as a suggestion to bet the family farm on TON. I myself have a pretty small holding right now and am open to various alternatives.

It is just my best and very humble understanding of some stuff that took place. DYOR and IMO has to be emphasized. I’m generally better focused when reading stuff than at a meeting but I’ll try to give my best understanding . I’ll also be going through today’s presentation as that was discussed in the meeting but most of the content in the presentation is self - explanatory and there were not too many extensive discussions while the presentation points were being read out. Page no. mentioned by me below refers to page no. of presentation.

1/ Attendees –

Michael Ji, Max, Peter Canterbury (PC) , Patrick Burke and David Edwards from company’s side who were in front. Paula was overseas.

There were around 11 people present including shareholders, those from the auditor’s side, etc. Other 5 were in front. There were around 20 people at last year’s AGM. I was wondering whether shareholders were tired of TON and skipped the meeting but I think it had more to do with the storm and rain that Perth experienced today.

2/ General matters

Resolutions went through pretty quick. Burke was acting Chairman of meeting. Meeting started at around 3:00 WST and resolutions and such formal stuff ended within 10-15 minutes after which the presentation was discussed. Burke spoke during the resolutions while Canterbury spoke during the presentation. After the presentation, there was a question session which was generally answered by PC. Meeting ended by around 3:45 WST

3/ Lithium - WGX deal

To the best of my knowledge as far as I can remember, the topic did not come up at all. This is good and I for one hope that management don’t consider going down that road again.

4/ Pages 1, 2 and 3 of presentation / of 21 - Disclaimers

Yes, PC actually pointed out to the disclaimer section. I think with all the ups and downs that TON has experienced, they are very wary of what they say and giving us any hopes.

5/ Page 4 /21 - TON’s key points

Some of TON’s key points mentioned here and worth reading the whole page
EPC tenders at discount to DFS capex estmates is a key point here, and PC spoke of it a couple of times throughout the meeting. Key point as construction capital costs would be lower.

PC Mentioned that Nicanda JV for both graphite and vanadium being considered.

6/ Page 5/21 – TON’s progress after administration
Basically a recap of what we have done till now after admin. Yes, due credit where it is deserved and we have been making progress.

PC mentioned that Argonauts considered us undervalued.

7/ Page 6/21 – Batteries and expandable

PC mentioned that all Commodities have cycles and we are witnessing unprecedented growth in the EV and battery storage sector which the world has never seen. Our graphite is suitable for the anode component of battery

Ancuabe is suitable for the expandable market and China, Japan, Europe, Korea legislation will all help out.

8/ Page 7/21 – graphite price rising

PC pointed out to note the price slowly creeping up and specifically highlighted to take a look at the creep up of higher value graphite, for which Ancuabe is suitable. As can be seen from the chart, price of high purity large flake graphite in particular has shown a sharp rise over last 1.5 years.

9/ Page 8/21 - infrastucture

PC mentioned that we are close to infrastructure which is a big plus.

10/ Page 9/21 – project moving on

One of those pages of presentation that gives hope that TON is well on path to eventual production or else they would not be talking of resettling process in final stage,etc. PC again mentioned that EPC tenders were at significant discounts. This would help us handle capital costs.

11/ Page 10/21 - marketing

PC mentioned that TON wants to maximize marketing campaign globally. As can be seen, product marketing is in several regions including Europe, Japan and Korea.

12/ Page 11/21 – picture of project

Both T12 and T16 considered for Ancuabe. Process of mining is simple. I think he mentioned that 4 sizes of flake were planned.

13/ Pages 12-15/21 – pics showing progress

These are some more pages that give hope that TON is well on path to eventual production with pics of some early works activities, site preparation for camp, access road upgrade (wet season is just finished and there is plenty of work to do to make road suitable), community engagement
PC mentioned that they engaged with 2 villages and some 1900 people and received 320 job applications. PC mentioned that locals would be getting priority and EPC guys would also be committing to priority for locals.

All this does show that TON does indeed seem to be taking good steps to move towards production.

14/ Page 16/21 - Nicanda

I have from the very first day been a Nicanda and battery fanboy; so I’m always happy to see an entire page devoted to it. PC pointed out SYR’s market cap and mentioned the potential of Nicanda. PC mentioned that there has been very little talk of late of anode while batteries were being discussed and graphite was a key component of anode. Discussions on with regards to Nicanda in China and Middle East.

15/ Page 17/21 – Nicanda vanadium in particular

Again extremely good to see Nicanda’s vanadium being discussed.

My only criticism would be that TON has been reactive rather than proactive on marketing Nicanda’s graphite and vanadium while a few of us were screaming out the same for the past 2 years.

PC mentioned that Nicanda was ASX’s 2^nd largest vanadium deposit as can be seen. A question was asked where would TON’s red dot be on the chart. PC mentioned that our market cap was only 60 million and someone else mentioned that this was only graphite. I think PC said this was the reason why no red dot was put. I think he implied that we really have so much more scope for our market cap – vanadium, Nicanda graphite, Ancuabe, etc, .

16/ Page 18/21 - Mozambique

PC discussed Mozambique and his past experience with Moz. I got the impression that he was very happy with his past experience there and was full of praise for the place. He mentioned how the gas industry was starting and spoke a fair bit about that. He pointed out that government there was pro development and compared it to Tanzania.

A question was asked about South 32 in particular and PC mentioned that Billiton was there since 20 yrs managing the project and later on when South32 demerged from BHP, this project is now against South 32’s name. He said the project was profitable. PC seems to know a fair bit about Moz (not just about TON) which is good to know

I think he mentioned that our EPC construction companies have also had a good experience in Mozambique and suggested that it was a low risk jurisdiction.

17/ Page 19/21 - road ahead

PC mentioned that Board investment decision has been decided subject to EPC and finance.

Announcement would be made to market pre-market tomorrow – so watch out for TON’s announcement when you wake up!

As Page 19 mentioned EPC tenders submitted and being evaluated and all this is hoped to be finalized by June

Nicanda discussions are ongoing

18/ Page 20 and 21 /21 – TON’s suitable and great sector

PC again mentioned that the sector was a once in a generation opportunity, and page 20 gives a quick snapshot of TON’s suitability

I’ll now move on to additional questions asked by shareholders

19/ Finance

A question was asked about finance. I think PC said many groups were being considered and Argonauts were assisting. I’m not that sure but I think he said that EPC would be 85 debt and 15 equity, but then he also said that other strategic investors were being considered and if 100 million USD was required then it would be 50:50 debt and equity.

A takeaway obviously is that we are going to have dilution no matter what.

20/ Interest rate

A question was asked about interest rate for our debt, and PC mentioned that it would be 300-400 basis points above LIBOR (I think I heard this part right) which I think he said is currently around 5% (not sure of current LIBOR rate and need to check that part)

21/ AMG
Question was asked about AMG and their profitability. PC said he thinks they had their best year ever but they wont give their financial results as AMG does not need to report that separately

22/ TON –Europe customers

Question was asked about our potential customers in Europe and PC mentioned that our graphite is currently being tested in Germany and other parts of Europe

23/ Potential Takeover of TON

Question was asked about potential takeover of TON. PC said that their main job was to get TON ready for development and take decisions in best interest of shareholders. PC said that TON is very undervalued, and any decisions would be taken back to shareholders to have their final say. Graphite has been unloved since some time but with constraints on Chinese graphite production, etc. all this could change. PC specifically mentioned Nicanda as a game changer and I was very pleased to hear that.

24/ Joint venture status

PC said that this takes time. Some interest from China and Dubai is coming. PC mentioned that USA now considers graphite a strategic mineral and Nicanda fits well, and hopefully people might go all out to secure this critical raw material. Nothing would happen overnight but TON is trying for JV / farm in while they currently focus on Ancuabe. PC said that they have been talking to people about Nicanda.

Final words from a shareholder was that TON’s progress was absolutely fantastic

25/ Conclusions and final words

a/ A reminder again that I currently have a small holding and am indifferent to any option – buy/sell etc. I have tried my best to mention some points of today’s meeting but it is unlikely to be fully accurate, complete, etc. Please DYOR!

As always, I have mentioned all that I can remember in this one comment and am pretty sure that I have nothing to add. In any case, I most likely won’t be available to answer anything else on Friday morning

b/ Happy to see no talk of the WGX lithium fiasco

c/ I was very happy to see Nicanda getting a fair bit of talk. FINALLY! As mentioned above, I feel that TON could have been much more proactive about it. I got the impression however (may be wrong) that fair bit of talks were still required.

d/ I got the impression that we really are going to move on towards production eventually.

e/ Dilution would come at some stage and this IMO is one reason why share price does not move significantly.

f/ Price could fluctuate over next year mainly taking into consideration news flow confirming moving towards production, EPC finalization, finance agreements etc. There would likely be some good trading opportunities along the way with some significant fluctuations – both up and down.

g/ Watch out for tomorrow’s morning pre-market news update of board approval of investment decision.

Please please please DYOR!
Cheers

Expand

Brilliant, thanks OZ, your thorough summary almost made me feel like I was there. Very positive/promising indeed. (and think you too gimme).

So PC - you'e set the stage for success . What have you got for us today...hopefully a little Easter egg in with the great news forthcoming this morning as mentioned above...can't wait.

KL - feeling very optimistic - even more so than usual EEEKKKKK!!!

(20min delay)
Last 1.1¢		Change 0.000(0.00%)		Mkt cap ! $17.25M

Open	High	Low	Value	Volume
1.0¢	1.1¢	1.0¢	$5.222K	482.0K

No.	Vol.	Price($)
6	584415	0.010
7	1090999	0.009
3	1422863	0.008
4	795619	0.007
4	848475	0.006

Price($)	Vol.	No.
0.011	135650	1
0.012	1630007	7
0.013	500000	2
0.014	1499419	3
0.015	482500	3

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