Investor Update, page-143

Thanks, AlphaG6, for bringing this report to our attention.

It is most interesting and comprehensive. It is particularly good in explaining the underpinning technology. While there is a certain amount of repetition arising from the structure of such reports, with summary information repeated but in greater detail in the report body, I find it presents a good historical and development outline of recent years. There is fair comment on the difficulties Anteo has faced in gaining commercial traction, which is balanced by the report's observation that every player in this field is necessarily speculative until deals are on the table.

I learned a few things I had not heard or noticed earlier. From page 10:

"Anteohas also conducted some initial studies to evaluate the use of AnteoCoat oncathodes. In initial tests, a metal complex cathode coated with AnteoCoat wasintact after 1,000 deep charge/discharge cycles, with some residual whiteseparator material, while the metal complex cathode not 11coated with AnteoCoatwas cracked and a majority of the cathode material had dislodged from thesupporting foil (Figure 5),"

I had also wondered how long a deep charge/discharge test would take - about 2 hours (p.19). We can assume such testing is automated and ongoing. And that collaborators are kept up to date with progress.

The valuation section of the report interests us all. I don't know the complexity of such valuation models, which probably can be partially verified for established businesses, especially if they can be proven through hindcast (e.g. pick a point five years earlier, base the model on what was known and anticipated at the time, then run the model forward with new developments and data, and see how well the valuation matches the SP progressively). Anyway, I'll take this valuation as it stands, as I have no better method myself.

In the model, a valuations are provided for the base and optimistic cases. For batteries, these are A$34.9m and A$47.3. In both cases a 12.5% probability is assigned. Such probabilities are highly subjective; it is ironic how well trained all we monkeys have been, that once an opinion has a figure placed on it, we ascribe greater veracity to the opinion. Happens all the time. Fails the pub test very often, but who cares? I've published it, it's been peer reviewed (i.e. by my type of people who subscribe to the same myth of certainty . . . ). No, I don't mean to be unfair to the author of the report, who clearly recognises the uncertainties. And to perform any maths on it, he has to put a figure in. I do the same myself! But here is the interesting bit:

"We believewe have been conservative indeveloping our valuationrange, so there is significantopportunity to increase this in the event of commercial success by Anteo:-For the battery project, a successful licensing deal wouldreasonably lead to an increase in the probability weightingassigned to our valuations. Aswe note above, this iscurrently only 12.5%.Consequently we could reasonablyincrease this eightfold in the event of a deal being announced." (p. 28)

Does that mean that if a substantive battery deal is announced, the $34.9m for the base case is multiplied by 8? Can I extrapolate, assuming the DCF factor remains the same? If so, the valuation figure for the base case changes from 2.9 to 17.5 cents.

Interestingly, by changing the base model to zero dilution by another 500,000 shares at 1.5 cents, the total value drops from A$47.5m to A$40m. For 1.163 m shares, that is approximately 3.4 cps (on the model's original probabilities).

Please let me know if my assumptions (or my maths) are incorrect.