Hi @bobby1978
Although I have been following TON regularly, I have not been commenting much mainly due to fact that as I mentioned I might be in and out (if opportunity presents) and hence it is slightly awkward for me to comment and sing praises about TON’s long term prospects when you could very well see me with a “not held” disclosure in my next comment. I hope all readers read my comment in that light and I’m clarifying that once again.
I’ll try to share some thoughts on recent events as you requested but some parts might be repetitive due to the simple fact that TON is moving on more or less very much expected lines this year, as many of us have anticipated.
Pros –
1/
Production – As mentioned earlier several times, TON is giving signs that we are heading to production. It is starting to look more and more likely as TON has been ticking boxes almost non stop with a solid air of credibility surrounding management
2/
Grossly undervalued- TON is still
priced for bankruptcy IMO. Massive scope if all goes well as none of the potential good news seems to be factored in
3/ World class graphite projects still very much there and TON seems to be taking a
step by step approach to realizing value one at a time, which is a healthy approach. No point rushing in and bankrupting ourselves and TON management seem to have given this some thought.
4/ Production covered by offtakes – TON’s production is
completely covered 100% by MOUs/conditional offtakes. This is really very significant if all goes well and conditional offtakes and MOUs turn binding. What is also interesting is that 2 of our potential offtakes are with graphite companies
Cons –
1/ Nicanda graphite / vanadium marketing- I’ve mentioned this so many times during the year and it needs mention again. As I’ve mentioned, TON has to be prepared for a battery boom as IMO there would be several boom / busts along the way for battery related commodities. Lithium / cobalt stocks are on fire again, and IMO SYR has also risen a fair bit due to its battery story.
TON has downplayed the Nicanda story for far too long IMO losing out on some hype.
And what about vanadium? I believe that vanadium has also risen sharply but TON has not been talking about it at all. Until 1-2 months back, I had almost forgotten that we have vanadium
Addressing above con - Recent
presentation thankfully mentioned Nicanda a lot and there might be hope that JV talks are advancing well. IMO, there could be significant potential for re-rate if terms of JV for Nicanda are favourable. TON has to ensure IMO that we retain a fair share of the JV.
2/
Overexposure to China/ country non-diversification – All our offtake/MOU are with Chinese customers.
Obvious country non diversification risk and especially when market generally does not value Chinese MOUs offtakes and mainly due to the fact that several have not worked out for ASX companies in the past (including for TON). New MOU is also with Chinese company
Addressing above con – As mentioned in past comments, TON’s wild card on which I’m counting on is Minjar/Shandong and being Chinese, this issue not be relevant at all for TON (unlike other companies). In fact, this could end up being a great positive, as newer opportunities might present themselves.
3/
Dilution – Obvious risk of dilution along the way for finance, and this could be one fear for some
Addressing above con – Still grossly undervalued and TON could have very material spikes before any financing related dilution.
4/
Lower highs and lows – After 11c high recently, we seem to be making lower highs and lower lows. Slightly disappointing to see the rally run out of steam
Addressing above con – Still appears to be accumulation IMO although I can be very wrong. So please DYOR on this part especially. Falls ideally seemed bot inspired and very low volume which possibly suggested accumulation. Also some consolidation is completely natural and even healthy. Hopefully major shareholders will step up
5/
MOUs and not offtake – MOUs need to become binding and is an obvious risk given history of several ASX companies.
Addressing above con – As mentioned above, Minjar/Shandong are possibly best poised to ensure that these MOUs become binding.
Conclusions –
No significant change from recent times really but bit by bit, TON is moving along as per completely expected lines and moving along quite well. Management have not generally overpromised which is a good thing, as they have delivered what they have promised.
TON is still a work-in-progress and share price reflects this. If and when market senses that this work-in-progress is turning into a finished product, share price should ideally automatically address the situation as lower risks translate into higher price.
TON is obviously still a risky stock and there are some genuine risks as mentioned above. Reward does however appear commensurate with the potential risks as rewards could be very substantial if risks are addressed.
(20min delay)