Iofina Share Discussion Threads

[bocker01] 16/1/2015 10:35

SG they had around 7.5m cash in October. With all the payables flying in, I would expect it to be around 10m now. A water JV means of course we'll be 20m or more. That funds a lot of expansion for us in Q3 / Q4. Hence a year end exit rate of 1000 to 1250 tons at higher prices, with loads of dosh in reserve. Actually they will be in the very different situation of having more than they need by a considerable amount. Of course the boards figures for 2015 extra production ignore the significant production increases possible from May to September with very warm brine. I guess this boost is being kept back to compensate for unforeseen fracking. Water profits may start sooner than expected if the JV payment is greater than the book value of assets that IOF inject into the JV, which may well be likely. An exceptional year coing as Tom Becker says!

[superg1] 16/1/2015 10:10

Che I'm wondering what the costs will be like H2, as we know George and co made a huge mess of it in H1.

H2 last v H2 this year, they have doubled the revenue this year.

I estimate they would have between $7.5 to $10m in the bank now judging by the comments made in recent months

[superg1] 16/1/2015 10:02

Octopus

It made, and makes no sense at all that a company (SQM) that controls 30% of the market should have it's price dictated by the likes of RB energy and Cosayach who are in serious trouble.

SQM have been in a heated battle with Cosayach for 15 years now. SQM tried to take out Cosayach in 2001 when Cos hit troubles which were not as serious as now.

In SQMs main areas, Cosayach have leases. SQM are under threat for their main production as they have no access to seawater. Cosayach do as they are in the process of building a seawater pipeline. SQM tried to block that.

SQM are also under threat of losing 38% of their revenue due to CORFO who own the leases (lithium area) wanting to withdraw then from SQM in a current court battle.

Cosayach have sizeable leases for lithium in the same area but are not producers.

Quite simply SQM want Cosayach, their pipeline, and their lithium leases.

The 2001 issue for Cosayach that nearly finished them somehow managed to drag on until this year ($120 mill court decision in favour of state street bank).

Then came the $70 mill German bank win against Cosayach ($70 mill).

Next the IRS found tax fraud $82 mill, with recent office raids.

$270 mill of payments. That is before fines in the IRS case which can be 4 times the amount of tax avoided.

So when the final bill arrives it's going to be somewhere between $350 million and $500 million. They can't survive that and SQM know it.

SQM gave up some of it's market share of iodine, we worked out form historic actions by them that it was down to high cost mines which they them closed. They stripped back their costs using the best production areas, then went on a price reduction strategy to stifle the cash flow for both Cosayach and RB energy (($200 mill plus debt and going bust).

Cosayach probably had 2000mt and RB had 800mt of inventory plus around 1200mt production.

A $15 per kg shift in the price has meant both will lose $30 million of revenue which would have been profit.

SQM ducked and dived questions re giving up their market share in conference calls but finally said this in their last news.

"We are working to recapture our market share, and market prices have reflected these efforts."

They are the OPEC of the iodine world and are trying to kill off their long term hated rival and pick off RB as a bonus.

They actually want Cosayach, so while they have hit their own revenues, the strategy (if it works) will pay off big time.

By reducing the iodine price they have killed the cash flow of both companies who have huge payments to meet. That price drop also creates a massive drop in the value of each company.

Taking RB and their NPV report. If you go by the guidance in it, the RB mine has gone from a $156 mill valuation to zero.

A smart move by SQM but the market thinks it's over-supply or lack of demand.

SQM are very aware of IOF too, and what they now see, with the thumbscrews almost at full tilt, is a successful IOF.

The current line is SQM want Cosayach and they believe Cosayach are finished.

So the price will rise when SQM want it too, subject to inventories running dry. SQM did not want either of those companies getting good returns for the inventory build ups they had. The Cosayach build up was on the back of stealing SQM water.

[che7win] 16/1/2015 08:35

octopus,
more importantly, cash flow will rise exponentially as our costs of running the plants are fixed.

[octopus100] 16/1/2015 08:23

The board saying it will be an exceptional year is very bullish - since Lance came back they have been very careful to underplay things. One factor that is obviously an unknown is that their predictions are based on the current price of Iodine which has come under pressure recently - any increase in the price will naturally cause revenues to drastically increase (though opposite is also true), though my feeling is prices will move to upside once this alleged price war is over.

[naphar] 16/1/2015 07:35

"I don't want IOF to go it alone with water. It has taken us two years to get our head around what"

I still disagree with this view Spike.
For cold at least, you put in the kit, pump the water and sell it.
Iof have proven:-
1) They can install plant, for water it will be much simpler plant than for iodine extraction.
2) they can pump brine around an iodine plant so should be able to pump river water to trucks.
3) They should have the customers given the LOIs
4) They can sell,35% growth in 2014 proves that
5) the plans/designs are all approved
6) They have a water expert on board

My couple of niggling doubts are:-
A) is the demand really there or is maca right? I am betting the demand is there or IOF wouldn't have come this far
B) the hot water part is a bit more complex a process. But I imagine the kit is pretty standard again so don't think it is that big an issue.

I simply do not see any JV being for just one 80k bpd license, if I were trying to be the JV partner, i would want to be protected from future competition by having future expansion included in the deal.

if the potential really is as large as some suggest, the upfront would have to be significant to justify giving away, say, 50%, in my mind.

[senden11] 16/1/2015 07:20

Good, upward momentum on the share price these past few days - never thought I'd be getting excited about IOF bursting into the 40s - yet again!

[roboben] 16/1/2015 07:15

Yes, I'm with you on that, Spike.

[spike_1] 16/1/2015 00:22

I don't want IOF to go it alone with water. It has taken us two years to get our head around what's required to make iodine a successful business, what makes us think IOF would be any better with water which is very competitive.

If we do a JV 50% for this licence, that still leaves us 150% more water still available for future licences which could be a separate 100% owned venture if we were so desperate to run our very own water business.

Best wishes - Mike

[bobbyshilling] 15/1/2015 22:15

Bogg1e, well that is another viewpoint, and is still sound. Whichever way they go, this (initial) water permit should propel this company forward at a great rate of knots.

[bogg1e] 15/1/2015 22:06

bobby, i think the hal agreement included a 50/50 split of the revenues. I know what you mean though, have less now in order to have more later. I think the takeoff agreement with the japs is similar. However a cash injection would be great for the roll out, especially if the japs are prepared to pay for it. Lance in effect could roll out without aving to spend any of iofinas cash reserves. Lance has an interesting time ahead, cos he wants to increase both production capacity and IOC production, japanese takeoff agreements, expand the water business (after all there are two more applications to reach 200,000 bpy), as well as pursuing further water rights, pay off some debt maybe, but he cant do all of them at once, even with a decent cash injection from Hal! Or can he? Hmmm...

[crazycoops] 15/1/2015 21:59

rhwillcoll, I concur.

[bobbyshilling] 15/1/2015 21:52

Bogg1e,

Yes, I hear what you say, but in theory, if all parties are at the meeting, this could be done "on the day" so to speak, but there again, taking on board what you say, I might just be hoping for too much!

I am sure that IOF have been/are in discussions re: a partnership with part of the permit, (they have implied this in rns's saying that they are continuing to plan as if the permit were going ahead). I personally hope we keep 100% of the permit - should it be awarded - as it would be a cash cow for years ahead, even if it is financed by a shares issue. Income from 80000bpd of water even at $1 a barrel is at least $25m per annum, (allowing for some down time for maintenance). Also, we are going to supply heated water, which commands a lot higher price, so that figure might easily double. In the short term, that is more cash than iodine will probably produce for the company, although water is supposedly "non core".

I am aware we are primarily an iodine company, but short term the extra cash from water is mega, and will finance the iodine production going forward, including mobile units. IOF have worked very hard over years to get to this stage in a water permit - on top of this we had the opportunity to partner HAL a few years ago - so it seems rather backward looking to seek a partner now, especially when 99% of the work has been done.

Just my view of course.

[superg1] 15/1/2015 21:32

Monty

It's been an exceptional year for the chem div as the price dropped like a stone but somehow they have increased revenue 35%.

We know their standard iodine use is about 350 to 400mt. We did point out the unique new niche products so they have that market to themselves.

In the previous interview he talked about having supply agreements more or less sat on the desk but not enough production to help out the queuing customers.

We know they would like to push any further production through the chem div short term to add value.

There was talk of $2 mill cost cuts in H2 which equates to $4m over the year, add in the expected 40mt plus per month H1 based on disruption (fracking) and they will add further production with more plants. Iodine prices should rise too as the inventory dumping and higher costs in Chile start to bite.

So yes ignoring all else it should be an exceptional year.

Water is an extra but looking at current oil prices is no guide to what will be a 40 year prospect in the Bakken.

Oh forget the off-take agreements I just checked the interview, the interviewer asks if 50 million tons per month is the trigger point for supplying others.

As optimistic as I am I don't think IOF will hit 50 million tonnes per month.

It would be nice at $10 per kg profit at that rate.

Fag packet calcs on a PE of 15 for that rate puts it $45,000 per share,

I think she meant misread the M which was metric tonnes. :-)

Perhaps she is the buyer having just had the time to do the calculations.

[rhwillcoll] 15/1/2015 20:43

I'm not a great fan of charts for news-driven AIM companies.
However, the Japanese Ichimoku system usually calls it right. On 13 Jan this formed a Kijun Sen Cross, a weak bullish signal. Today, 15 Jan, it formed a stronger bullish signal, a Chikou Span Cross. I for one find that rather riveting :-)

You can check it out here:


PS I am a long term holder, and will wait until a Japanese company buys us out.
My "internal chart" says we're going to be bought out by the Japanese within
12-18 months from now, so that is what my personal chart is saying. So, let's keep it all Japanese, shall we :-)

[brucie5] 15/1/2015 20:04

Katta, at risk of causing gross offence to the fundamentalists here, I'm obliging you with a chart. Reason being that I think in this case the trend reversal will be well signaled when it breaks decisively over the 50p level. At present, though I bought in today at 37 and 40, the chart is still ambivalent, which probably reflects peeps only too happy to take a profit, if they bought in at recent lows. The chart also shows the depth of the fall from the giddy heights of 2.40. A decline of 85%. I usually earmark a share that falls more than 50%, for a further fall of 50%, but that level was reached here at 6op, since when it fell another 50% before recovering. 60p looks to me like the clear initial target for any definite recovery. All fwiw, nai. GL!

[joestalin] 15/1/2015 19:45

"Anyone care to read the chartist tealeaves?"
No thanks. Spin a coin. It is quicker and just as reliable.

[monty panesar] 15/1/2015 19:38

I am still musing on what Tom Becker meant in the RNS saying that the Board expects 2015 to be an "exceptional" year. For someone that seems cautious by nature there must be something they are very confident about.

I can only think they have a trick up their sleeve on mini's or else they are very pleased with the way the water jv talks are going.

[superg1] 15/1/2015 18:56

Please No No !!!!!!!!!!

It's broken out through the upper trend line and if you shout too loud Zac Mir will point to a decent rise coming, and then that will instantly destroy the trend. I think his last one in the 60's pre long slide said it was heading to 82p.

[stevo2011] 15/1/2015 18:38

Bring back Titus !

[kattatogaru] 15/1/2015 18:36

Anyone care to read the chartist tealeaves? I'm not a chartist but sometimes and for purely superstitious reasons, I like to know what the augurs think. Vale!

[bogg1e] 15/1/2015 17:05

bobby, im not sure. I thought the regulatory authorities require the objector to drop the objection in writing, after which the authorities have 30 days to inform Iofina that they have the permit, so the process could still last until 3rd or 4th week of february.

[brucie5] 15/1/2015 16:37

If IOF does what its supporters say it can do: become long term growth play in an international market, then I would imagine it has potential multi-bagger potential over several years. That's enough for me. All my stocks should have that potential. Whether they deliver is another question!

[brucie5] 15/1/2015 16:34

You're right there. It's often just a question of getting into the right queue, as opposed to wrong one.. only to find that out when you get to the front after much time. Even more painful to get into that right one, and then have misgivings.. only to discover you were right. I generally find that the chart is a better guide at timing a good entry point than the pis who know everything about the share. No disrespect intended, but to be several years too early is almost as bad as being.. wrong. Speaking for myself.

[superg1] 15/1/2015 16:28

Neddo

Sadly investments are all about waiting, that's the way it works.