Ann: Share Purchase Plan, page-6

P23

The share had been marking time for quite a few weeks as the market was expecting a capital raising. The point to focus on is that the capital raising is quite modest, which suggests Talga are probably expecting some income in the second half of 2020 from Stage 1 production, which should provide sufficient working capital to sustain the company to Stage 2 production.

The other point is that Talga still have 1000 cubic meters of material in blocks from the initial trial mining exercise, which will be used to produce graphene marketed under their brand Talphene. I understand from conversations with the company that the material for graphite production will be mined traditionally with blasting followed by excavation. The recent presentations all show that it will be treated nearby by third parties who process material in rubble form.

This is why the share price did not immediately fall to the issue price for the capital raising, most of those investors whether on the sidelines or whether in jurisdiction precluded from participation, such as the United States, have all understood that this is probably the last chance to get on board and or to top up holdings at levels below $ 0.50. Shareholders have obviously sold some holdings to finance their participation in the SPP, but that arbitrage has diminishing returns as the price falls and the limit of $ 30,000 is reached.

I note that Talga has made considerable progress on many fronts since its last high at nearly $ 1, once this capital raising is completed I suspect that the market will rerate the company more favourably. I also expect that the additional capital is a requisite for any financing for Stages 1 and 2 as alluded to in recent presentations.