Bypassing the SML 30% Listing Laws, page-38

Bailey241,

There is nothing wrong with the structure you presented.

Professionally, I would have recommended the same method with a few differences - namely, I would have structured it where UTL and MTT transactions are at arm's length - ie. the price UTL received for its raw graphite should be what it could get by selling to an outsider.

People forget that it has been MNS - the parent company, which has been funding the research and development to add value to the graphite ore, not UTL.

And whilst UTL is the company that owns the licence to the mine, it did not and does not have the money to fund any of the R & D.

As such, there is nothing wrong by setting up a separate company - MTT, which is owned by MNS, to house and utilize those intellectual properties (the fruits from the R&D) to add value to the raw graphite ore.

This is similar to BHP or RIO or FMG who sell their Iron Ore onto Chinese companies, who in turn add value to it by turning it into steel.

All MNS has to do is make sure any transaction between UTL and MTT are at an arm's length.

MTT in the end, will always derive a higher margin as it is the company that is "adding value" to the Graphite ore.