Iofina Share Discussion Threads

[superg1] 08/9/2014 14:57

Phew

The amount of SQM stuff is mind blowing re the Ponce Lerou case, so let's see what appears over the next few weeks. What is clear is that the aftermath is not pretty.

There are calls for him to resign, some sectors of suing for loss of pensions and other related points. Calls for investigations into the concessions awarded to SQM during the Pinochet dictatorship.

Ponce Lerou married Pinochet's daughter and during that time Lerou became a billionaire with his companies getting big favours from the government.

If you recall it's only a couple of years since the debacle over a recent lithium tender where SQM were awarded it. It was revoked and the mining minister resigned over it.

There is clearly a lot more to come on SQM and Lerou in the coming weeks and months. I very much doubt he will be around long, and one wonders how many companies and individuals will be taking legal action against them.

I see Antofagasta gets a mention in those possibly interested. SQM do have leases with copper on. Antofagasta are linked to the Japanese, Marubeni have a 30% holding in Antofagasta.

[che7win] 08/9/2014 14:41

Spike,
Everything you say is correct, I am well aware of these two currencies relationship over the last 20 years.

However, I was highlighting a fundamental change in Sterling's behaviour since the start of July.
There has been a sharp reversal and collapse against the dollar, this is the longest losing streak in over four years.

I also expected interest rates to rise this year (Mark Carney thinks differently), now we have a near unthinkable scenario from just a week or two ago that the Scottish referendum could result in a 'Yes' vote.

It's worth following the story as it will affect everyone in the UK if Scotland gains independence.





A bit melodramatic:

[superg1] 08/9/2014 14:18

There is a lot out there re SQM since the Ponce Lerou $70 mill fine popped up.

Here is one recent media comment.
..

(Pulse) Stir in the market continues to cause the fine sent on Tuesday Superintendency of Securities and Insurance (SVS) under Case Cascades. They are $ 70 million to be disbursed driver companies, Julio Ponce, a figure that was enough for the emergence of market-level speculation regarding a possible change in control of the underlying, SQM.

The interest is not new. Since the indictment was known, at least three economic groups probed field to see what possibilities there are to discuss the control of companies, interest has been growing since September last year, despite the refusal of Ponce by detached entity is known.

High sources confirm that one of the groups that came was Luksic through its mining arm, Antofagasta Minerals (AMSA). Although the talks did not go beyond an approach, executives who know that after the meeting said the fine could resume interest. Why? SQM Mining properties exceed those of Codelco.

In parallel, Julio Cardinal, partner in the firm's corporate finance Landmark, made presentations to some economic groups warning about the chance that any penalty Julio Ponce could mean to anyone who would take control of SQM.
In fact, a few days before the indictment was known, AMSA and SQM signed an amendment to the contract of sale of mining claims, which had to do with replacing the variable price structure, consisting of annual royalties (royalties) originally agreed, by a single payment of $ 84 million.

"There's always interest crosses belongings SQM," says a source.

In parallel, other executives suggest that BHP and Vale still hovering and have never lost interest in taking control of the firm.
Shares

The market seems to have taken the news with some reassurance. Yesterday, the B series of action SQM rose 0.15%, while Norte Grande climbed 5.03% and 4.74% white gold, but with low volumes traded.

However, not a few also start talking about the increase may be due to the bet the market for a possible change in control. And it happened, there is a possibility that should be a takeover downstream.

Several sources explain that the market capitalization of Norte Grande is approximately $ 380 million, which values ​​the 67.53% Investment SQYA in about $ 250 mills. However, market prices do not necessarily reflect the value of the waterfall. In fact, the discount currently exists on the underlying asset (SQM) is around 80%.

Meanwhile, other sources claim that an interest of PCS (SQM shareholder) is not ruled out. In February, Bill Doyle, CEO of the Canadian said: "We would like to be in control and I think there is a possibility to do it in the road." To do this, however, a change of statutes that allow each shareholder having more than 32% of the company would be required.

Banking

The penalty Julio Ponce did not escape their creditors. Banking sources say once known the fate of the research carried out SVS have been concerned to review the scenarios that could face the company.

Among the alternatives analyzed, is the potential impact it could have on SQM sanction against its controller, which despite being unlikely, was the subject of discussion and reporting to top executives of exposed entities.

The director of a local authority, said that while the credits are in the cascade are guaranteed, the possibility of providing new financing is hampered by reputational risk.

But not rule out a possible change in control of the firm.

[spike_1] 08/9/2014 13:35

With respect -

Sterling hasn't 'collapsed'. It's value had been increasing due to a perceived likelihood that the UK would be the first to raise interest rates. It is now losing some of that gain due to uncertainty over Scotland. It is still higher than it has been for almost all of the last five years.

Best wishes - Mike

[neddo] 08/9/2014 13:22

jam tomorrow ?? a good chance.

[che7win] 08/9/2014 12:33

Anyone watching the dollar vs sterling exchange rate?

That must be 8-9 straight weeks of sterling falling, now around $1.61 to £1.

It's good for IOF shareholders, not a bad idea to have assets in the US right now, especially with Scotland possibly leaving the UK.

Sterling has collapsed from the start of July.

Mr Big, did you do some fx trading on this pair?

[superg1] 08/9/2014 12:32

For all I know they could have done 40mt plus and exited August on more than 1.7mt per day, but as we have the slightest clue what has been achieved it's best imo to take the cautious thought process route.

I'm sure many will have placed their 'bet' while some others looking on will wait for the update to consider the next move.

Some bigger investors (perhaps watching funds) may want to see 50mt plus per month consistently for the first 6 perhaps over a 3/6 month period.

As for the bonds which we have discussed, one can be force converted, the other has a choice.

If Stena wanted the cash when it comes up, then by that time IOF should be on far better production, to either pay it off, or take a loan.

US banks currently only tend to lend money when you are making money, that's why IOF went via the bond route.

On the supply side, it feels a bit like the mid June to mid July scenario where MMs were creating the supply with 3 going to zero selling 1 mill in that timeframe.

Cleary we still have the buyer/s though and one at least is surely well over the 1 mill shares mark now.

[superg1] 08/9/2014 11:54

The reason for my 40mt caution, is that although it's was announced on the 14th there are some slippage factors that could dent that.

io2

'The Operator is in the final stages of completing a state of the art SWD design which is expected to eliminate 98% of oil in the brine water resulting in lower cost and increased efficiency at IO#2. The project is expected to be completed by mid-August'

(so was that completed on time, and when complete did it work properly, did they have to tweak it, make changes and so on. it affects Aug 2nd half production)

io4

'IO#4 is currently being upgraded with a booster system which will be placed on the Operators SWD site and will be capable of delivering 30,000+ barrels per day of brine to the plant. The upgrade is expected to be complete in mid-August'

(does that fitting of the booster system have a disruption aspect, and was it completed on time. It affects August 2nd half production)

io6

'IO#6 began full production this week. Delays in IO#6 start-up were due to Operator design changes at the tie in. The Company expects good water quality and quantity at IO#6 and therefore favorable production volumes.'

(Has io6 hit any snags, it only started 3 or 4 days before the rns, and contributes to the 2nd half forecast)


i03 and io5 seem to have been running well. io1 really doesn't make a lot of difference.

So 2 of the main 5 relying on operator prompt and efficient execution of the tasks, plus io6 reliant on no start up issues.

Then we have to throw in any frack disruption issues which can't seriously be forecast.

No doubt some have made the bet on T-trades with cash they haven't got for a quick buck.

[che7win] 08/9/2014 10:47

I'm with superg on this,
I've been urging some caution in expectations because there were quite a few changes happening last month.

No idea of production figures, it's September figures that I'm looking forward to, hopefully a clean month.

[madchick] 08/9/2014 10:38

I agree with malachey. And they knew about IO.2 when making the forecast. Not an excuse, IMO. However, unforeseen things can always happen. But I really hope not. IOF need to show they can beat expectations at this stage. However, it's not as if the potential declines if they don't.

[che7win] 08/9/2014 10:34

Following on from STVG,
The market has chosen to ignore the £40m debt and pension deficit (causing increasing payments to fund it).
The weekend poll suggesting Scottish referendum could result in a majority 'yes' vote means some shareholders will be getting nervous....

[danster4] 08/9/2014 09:56

After last month I was expecting the production update to be released early this month. But agree, the longer term outlook is more important than seeing numbers today. However, would hope there is something tomorrow!

[malachey] 08/9/2014 09:49

I would say expectation rather than assumption sg. The last update (in which they made the forecast)came halfway through the month, which halves the amount of time for things to have gone wrong.

[superg1] 08/9/2014 09:39

There seems to be a general assumption of 40mt hit, but we know as in the recent past the operator can have factors which affect brine flow.

EG on this occasion, mid month, they said io2 was to have the SWD upgraded. Any hitch there and io2 wouldn't have the brines we would expect for the 2nd half of the month. If I lived in OK we I could soon say the SWD is fine, or upgrade not complete, teething issues etc etc.

But then I'm not looking to exit post whatever the August update is.

I don't see August as a frack decline month as the weather should be so good.

Then the other aspect is the best daily rate achieved, if that happened on 1st Sept rather than 31st August, then I'd want to know what it was. Equally if circs meant today will be the best day and be a general indictor, then I'd want news tomorrow, not today.

I can see the CEO news opinion point, but I'm not attaching anything to it.

I haven't the slightest clue what the monthly rate was or the exit rate, and I'm not worrying about what it might be either.

All I know is they are moving in the right direction, with some things fixed, and some more things to sort out.

[malachey] 08/9/2014 08:40

Disappointed but took the opportunity for another last minute top up - hopefully it will be a good example of 'impatient to the patient', as I'm sure the rns will land soon enough and see no reason to suspect negative news because it didn't arrive this morning.

[madchick] 08/9/2014 07:44

Maybe he's scared of us? LOL

[cyberbub] 08/9/2014 07:26

Bit surprised, never mind, will be here imminently. Maybe they're waiting for more news to announce?

[madchick] 08/9/2014 07:13

I wonder if Tom has a hangover after celebrating his new job over the weekend :-)

Actually, more like a headache with all the work he has to do!

[orslega] 08/9/2014 07:12

Clearly Tom is not an early riser,lol

[cyberbub] 07/9/2014 23:46

I am expecting the production update in the morning.

The key thing to me is whether they can meet the very specific 1.7 tons per day exit rate from August, that they predicted 3 weeks ago. That would give confidence that they have a grip back on their operations...

GLA

[awolagain] 07/9/2014 20:43

Last months RNS gave a number for this month....my guess and thats all it is...will be met and then some....based on we have just appointed a new CEO and he will come in on a wow RNS to arrive in the morning.
I won't eat my hat if I am wrong as I have none left!

[superg1] 07/9/2014 09:55

If the old excuse (as some call it) of frack disruption comes up again, please consider this.



Look at the map, look at the areas marked red. That's where IOF are and that is where the iodine is.

In the report over 500 wells were drilled in those 2 counties just last year.

The Bakken had been going for about 6/7 years now over a vast area, and the press full of how manic it is up there, in those years they have drilled 8000 wells over a very large area.

Woods (1290) and Alfalfa (880) county 2,170 sq miles. The North Dakota Bakken is 18000 sq miles.

So The Bakken on average has seen 1200 to 1300 wells per year over 18000 sq miles. Woods and Alfalfa counties saw over 500 last year.

Comparing the areas 18000 v 2170, the Bakken is 8.3 times bigger. That gives a equivalent rate of over 4000 wells per year for Woods and Alfalfa.

So there is 3 times the activity where IOF are, than the Bakken average.

Two nutty posters (Noli and I) 2 years ago were talking about an oil boom coming on the Mississippi Lime play, in the iodine rich areas of Oklahoma.

Jeff at one of the early presentations said, "If you stand at the top of the io2 tower and look around you can count 27 drilling rigs, it's unbelievable the amount of drilling going on."

So when any rns says, 'Due to frack disruption' I hope the above, including the link, gives you some idea that it's not an 'excuse'. It's a live highly active oil boom.

The area is set to be proved as one of the richest iodine resources on the planet and the cheapest by far by capex and opex to produce from.

Just as well then that IOF have unique technology to expand in the US, and no one else has the technology to use in the US. Then IOF have the business model protected by a patent anyway.

I think IOF should hire David Lenigas briefly to discuss in an interview just how much drilling is going on. :-) I'm sure the market would then get a graphic description of what is going on.

Then think about how much brine all of that equates to for the coming years. It's got to go down SWDs.


So I'm with Bogg1e and my opinion as always been the same, it's a very lucrative looking long term investment, with a big risk of major players trying to buy IOF.

Water and the other bits are just a bonus, but potentially lucrative themselves.

[superg1] 07/9/2014 09:07

IOF current circs.

I know many would love the 40mt to be hit for August, and I haven't the slightest clue how they have performed.

I am mindful that the operator at io2 was putting in new tech, so IOF are reliant on them executing that without and issues to have had a perfect 2nd half to the month. Going on previous issues we can't rely on that.

The strategy change seemed centred on getting the 6 plants up and running and optimised. Some big mistakes were made by George and co. IOF have been in a fixing period, which I know from experience can be more time consuming than just getting it right in the first place.

So we are still in a fix period for io1 to 6. The fracking won't forever be just around io2 to 6, it's a large geographical area. Midstates plan to drill over 700 more wells. The more wells that are complete the more brine there is in the system. The Miss play has very high cut on water. Water can be 5000 bpd and more at some wells. So already and over the next few years there will be millions more bpd of water going down SWDs.

Oil companies are already talking about other levels in the area, which historically have shown high levels of iodine in the brine.

[brucie5] 06/9/2014 21:49

Cyber, thanks: QFI and IOF are both more or less 25% for me also; but interested to see that profile others have here. Also holding FLOW, but much less.