The Offer

Company Overview

Tolu (formerly Lole Mining Ltd) was incorporated in PNG under the Companies Act in March 2020 and registered in Australia with ASIC in March 2022. It acquired the Tolukuma Gold Mine and its assets on October 3, 2022. The Tolukuma Project comprises one mining license and six exploration licenses, covering 1,252km2 around the Tolukuma Gold Mine. An additional exploration license application (ELA 2780) is held, and upon acquiring EL 2531, Tolu's landholding will be 1,370km2. The Company also secured the Mt Penck exploration license (204km2) on New Britain Island.

Key Highlights

Primary Offering:

The offering document outlines the proposition of issuing a minimum of 30 million shares at an offer price of AUD 0.50, with the intention of raising at least AUD 15 million. Alternatively, the offering could encompass up to 40 million shares at an offer price of AUD 0.50, aiming to raise a maximum of AUD 20 million.

Use of proceeds:

Portfolio Summary:

Dividend policy: The current operational phase of the Company is not yielding any revenue. Consequently, no dividends are anticipated to be distributed in the foreseeable period after the Company's listing on the ASX. The determination and quantum of potential future dividends issued by the Company are subject to the discretion of the Directors. This decision will consider several factors including the Company's earnings, financial standing, taxation status, and capital requisites. The Directors aim to periodically assess this approach and initiate the practice of providing regular dividends once the Company achieves a robust and enduring level of cash flow that can support capital expenses and other obligations.

Financial Highlights (Expressed in AUD):

• Pre-revenue company: The Company does not currently have any operational revenue and is not expected to until the Projects are successfully built, and production starts. The Company is in mine evaluation stage, pending the future development and commencement of operations and revenue earning from its proposed Tolukuma Project.

Key Management Highlights

Risk Associated (High)

Key Risks and Mitigation in Tolu Project:

• Access Road Development: Tolu has taken steps to mitigate risks associated with access road development. An established civils and road building contractor, Tunnel Engineering (PNG) Ltd, has been engaged to construct the road on a fixed price basis. Moreover, 55% of the payment will be made in shares at the Offer price of AU$0.50.
• Dewatering Strategies: In the short term, Tolu is addressing dewatering challenges through careful planning. A design and proposal have been secured from the mine's long-term pump supplier. This outlines the use of a pontoon-mounted, submersible pump system to initiate upper-level dewatering in Phase 1. Additionally, for the medium-term, discussions are underway with Tunnel Engineering for Phase 2, involving the bottom entrance tunneling and civils for long-term dewatering.
• Hydroelectric Power Station Enhancement: Tolu is actively mitigating the risks associated with the hydroelectric power station. Conversations have commenced, and proposals have been received from two seasoned electrical contractors. The goal is to refurbish the entire electrical system, including the hydropower station, ensuring reliable operations.
• Effective Stakeholder Management: To address potential stakeholder-related risks, Tolu has executed a binding Memorandum of Agreement (MOA) with landowner groups. The company is dedicated to proactive engagement, maintaining strong connections with local, provincial, and central government entities. This approach has garnered robust support for the project from these stakeholders.
• Budget Oversight and Management: To manage budget-related risks, Tolu has adopted a rigorous approach. The company has secured commercial proposals for essential work packages and subjected the budget to scrutiny by an experienced Engineering group. This group possesses significant construction and refurbishment experience in Papua New Guinea (PNG).

Conclusion

The enterprise operates as a mining exploration entity, yet its present state yields no earnings. Consequently, the Company's revenue generation hinges upon substantiating the presence of minerals within the Projects, their viability for extraction and sale, if any, and their economic feasibility. The Corporation's potential avenues for revenue encompass property sales and royalties from the Projects. It is crucial to recognize that the Company's capacity to realize gains from its activities is contingent upon multiple ambiguous future occurrences, coupled with the significant price volatility of the underlying commodities.

Hence, given the financial performance of the company for the period ending December 31, 2022, incurred net losses, and associated risks “Tolu Minerals Limited (TOK)” IPO seems “Neutral" at the IPO price.

Please note past performance is neither an indicator nor a guarantee of future performance.

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