Cut the cotton shirt into small squares. Put them in the Altoids tin and close it. Now put the tin in a vise to hold it securely. Light the propane torch and apply the flame to the tin. Keep the flame on the tin till you see no more smoke coming out the small hole. Remove the flame and let the tin cool. All of the cloth inside should now be charred. You can also do this over the coals of a campfire, which is how I learned to do this in the Boy Scouts.
How to light your char cloth: You just need a small flame or a spark. Bundle up some kindling into a small ball and flatten it out. Keep the kindling loose. Bits of brush work well, and I generally use shaved bark. Place the char cloth in the indentation that was formed when you flattened out the kindling ball. I always keep a magnesium fire-starter on my keychain. If using a magnesium fire-starter, make sure you aim at the char cloth when you strike the magnesium rod with the knife or blade on your leatherman tool.
Once the char cloth starts to burn, hold the kindling ball with the char cloth lightly with your hands cupped under the bottom. Make sure that once it ignites you aren't going to burn your hands. Blow lightly across the char cloth and kindling ball until the kindling ignites. Make sure the char cloth doesn't blow off the ball. Once the kindling ball ignites, build a fire around it. Start with smaller sticks and slowly move up in size to make sure you get a good consistent fire.
Char cloth is an easy and fun thing to make and it can save your LIFE!!! Yes, your life; if you get lost in the woods you can make a fire with it.