Iofina Share Discussion Threads

[scrutable] 19/6/2013 20:03

warren-searle

You denigrate today's party atmosphere.

How many AGMs have you been to? Most are lifeless, you could say depressing, even funereal. Often one is the only PI. All others(10-15) in the room are company flunkeys, Nomads, PR/IR people.and of course BOD. One feels that one is intruding.

Some BODs can't wait to get shot of PIs and get to an expenses lunch.
At one I arrived 5 minutes late. They were already leaving - done and dusted.

Many Chairmen mumble. Few are presentation gifted. Some are chartered accountants, and have no feel for marketing or IR. Some, who are on several boards playing Buggin'sTurn, despise shareholders.

The majority are obsessed with Compliance and keen to complete the formal part and close the meeting thereafter. At such, one has difficulty in asking a question unless connected with the Agenda.

Anything else you have missed?

Today most people were willing to talk to anyone and everyone. Were you? Did you?

That's the hall note of a party. Lots of shareholders jump out of their skins if spoken to and think you are after their business

[monty panesar] 19/6/2013 19:54

Reading the posts from the AGM am I right in thinking from the point IO#3 comes operational we can effectively expect one new 30k plant to come on line every six weeks or so for the next couple of years? Or is that a bit excessive?

[escapetohome] 19/6/2013 19:54

The chart looks as a picture as if there is now in place down saw tooth pointing troughs over the past few days. If you look back over the past year or so, that seems to have never happened before (almost).

Not trying to scare anyone, but I think as zac Mir said a break below around 1.90 and the uptrend may no longer be in place.

Rug rat was saying that the technicals point to a reverse head and shoulder which would be bullish. I hope so as I am fully committed to my investment in IOF.

By the way I attended the AGM today and was sitting near the front. I met one or two of you but had to leave a little early due to a commitment? Who is Chris sitting right at the front?

Thanks to all for the updates

Madchick thanks for the update

[battery] 19/6/2013 19:53

Ok, thanks for the clarification.

Makes more sense.

[naphar] 19/6/2013 19:51

Battery, I could be wrong but I dont think anyone suggested 3k bpd in relation to Io3 at all. I only heard he comment that currently the site has 20k bpd available, that was stated when asked how quickly new sites could ramp up.

[monty panesar] 19/6/2013 19:47

Surely the "3k at 1000ppm" is reference to mini#1 unit?

Edit. Naphar beat me to it.

[naphar] 19/6/2013 19:46

Lib Io3 was not suggested as 3k bpd at 1k ppm. That is how they seemed to be quantifying the "hyper" comment and would be suitable for the MI.

IO3 site currently has 20k bpd available

[battery] 19/6/2013 19:43

Thanks to everyone for their feedback from the AGM. Great to read Lance was looking well.

Question re: IO3 conflicting info.

It is 'initially' targeting 3k bpd at 1000 ppm, but then in Madchicks post "IO.3 is targeting >20k bpd."

Am I right in thinking that IO3 will be similar to IO2 in that it will have multiple pipe infeeds.? Hence the initial low bpd but high ppm feed from one source but plant scaled to support higher bpd but lower ppms once tied in from other sources.???

Thanks

[plasybryn] 19/6/2013 19:42

Thanks SCRUTABLE. Is that Gross or Net Profit of £50m pa. That would be c. EPS 39p
so on a P/E of 15 = £5.85 share price

Any better views please?

[scrutable] 19/6/2013 19:39

plasbryn
see my note 2504

[plasybryn] 19/6/2013 19:32

Is anyone good with the expected numbers here based on the latest information please?
Projected EPS for 2013 & 2014?

[diggulden] 19/6/2013 19:32

Excellent write ups all, much appreciated.

[the librarian] 19/6/2013 19:28

Good write ups madchick and naphar. I did wonder re: the supply to IO3 initially 3k bpd @ 1k ppm's but that will do fine :)

I suppose the Chileans taking notice in the next couple of months does make the company vulnerable madchick, so not out of the woods yet!

[n3tleylucas] 19/6/2013 19:18

If you're feeding back what BOD said, for god's sake don't add your own interpretation immediately after the quote. Thank you.

[naphar] 19/6/2013 19:13

I left the may PI pres with the feeling Jeff is a story teller who, whilst enthusiastic, was down playing the situation, but I had no proof of the down playing just a feeling.

CF clearly stated that he is being conservative and does not want expectations to run away.

I got the feeling that CF might be less open to the PI communications than lance, so hope those comms can remain open through lance or others at IOF.

This mornings announcement was not written too well IMO, lance received that feedback from a number of people and he understood where we were coming from. Hopefully those comments will be taken on board.

On the mobile units, need to get the design right as its a lot of kit to fit into tight spaces. The first and maybe the second should go in this year and are likely to be pilots. They plan to give a "design and build" contract on the MIs and let someone else worry about how best to fit the plant together in the restricted space etc. In an ideal world will be more than one this year.

I could only quantify hyper ppm as being over 1000 on low 3-4k bpd sites

On a full listing, might consider it in UK and CF can understand why people might ask from an II base etc, but not a priority for next month or two (not sure if he actually meant year or two?)

Prill plant likely to be put into Kentucky, assuming they do decide to buy one. If they do, then will be ordered this year but that does not mean delivered and installed this year.

CF was asked if they will become the largest iodine producer in the world. He answered "the largest, forget it, technically possible but unlikely". I think the unlikely bit stemmed from the idea they will be taken over but I am reading things into his reactions and body language so just guessing. He did not explain his reasons why it is unlikely.

CF stated that once on a roll, rolling out one a month must be possible.

They are hoping to get to a position where they can stock plants ready to roll out as sites are made available. I guess he only means stock of 1 -2 plants.

Lance "we have really down played where we are going with the Chileans. They will definitely take notice in next couple of months."

IO4 is ordered and will be FRP

IO5-6 soon to be ordered.
From the statement "Bids for IOsorb(TM) plants IO#5 and IO#6 fabrication are being reviewed, with completion scheduled for Q4 2013."
Comment from CF "might just make 6 plants in by end of year by skin of teeth"
Initially I thought they are contradictory posts, but the statement quote says fabrication and not commissioning scheduled for q4. So I expect IO5 commissioned and IO6 will possible be commissioned in q4 but not guaranteed - totally online with JP comments at PI pres.

[madchick] 19/6/2013 18:57

I am sorry I did't speak to anyone - I think superg spoke but he seemed to be with a lot of people and then I felt too shy to come over, on top of which, I suddely got brain freeze and couldn't remember his name to ask if he was him and I didn't want to introduce myself to anyone as madhick :-)

I made extensive notes, so here they are:

OVERVIEW
The meeting started with a background overview, then questions, and then the resolutions (rather unusual order!). I would say 60-70 people were present. Lance was there! Investec was present at the back of the audience.

I don't think the background really needs repeating here, but it did set the scene for the rest of the meeting insofar as the emphasis was on how it was an evolving company, they'd come a long way, and (IMV the message was that) we mustn't get ahead of ourselves in the excitement because it isn't there yet, it is still evolving. Interestingly CF said we were one of the bigger players in the iodine recycling business with around 5MT per month (I think this is the same as said previously, but I didn't realise this made us one of the biggest recycling players). I think he said that 45% of iodine use was from the USA.
IOC has been a success from the start and also enabled them to use the chemists to help them with technology issues. It continues to grow.

They have many 1000s of brine samples and just because a site is near where high ppms are does not guarantee that this site will also have high ppms. Each site is very individual.

IO.2 – Chesapeake changed their trucking contractor half-way through which didn't help as the contractors wishes as to where to send trucks differed from where IOF would like them to go. The Arysta deal was mostly down to LB. It was remarkable that IO.2 worked correctly from the beginning and it has significantly higher ppms than IO.1. Still not up to full speed, but there are 25 rigs around IO.2 so plenty of brine is available. I think he said currently 700 kg/day and will be 1000 kg/day. He was very proud of the fact that their technology can deal with all sorts of stuff that shouldn't be there and a washout of the system just takes around 3 hours. This included a load of oil delivered to them by mistake (if I understood correctly) without the supplier realising. IO.3 will be 1000 ppm but maybe only 3k bpd. Mini plants can be used and they are in the process of finalising a few of these this year – they can be transported by truck.

Montana water – not great value with the oil shale but oil found nearby; oil play is several years away, so the focus is the water (non-core). They are half-way through formal approval for water rights and they are doing everything the right way and do not expect any water sales this year because approx. 3 pumping stations will need to be built once approval is gained and this takes time. Expect news on rights in the next month or so. Water is more difficult in North Dakota and this is not at all imminent, but they are definitely working on it.

QUESTIONS

ANY PLANS FOR A FULL LISTING?
Maybe. Iofina was cost-saving only recently and is an evolving company and they are only just getting to the exciting stage. A full listing would open IOF up to more IIs. At the moment, the focus is to get everything up and running since we aren't there yet. There aren't that many US investors (I took this as a comment against a US listing). They aren't having a problem getting investors on board at the moment. However, it's not out of the question (I found all of this highly encouraging as it suggests they may be intending to keep the iodine business – hurrah!).

DID YOU SAY WE MAY HAVE >1 NEW MINI PLANT THIS YEAR??
The sites are there, but we still need the correct design and each site is different. It's a very attractive proposition and could have a number in the same area. Ideally there will be more than one, but at the moment the mini plants have not been designed and the first will be a pilot.

WHAT'S THE VALUE OF IOF (CONTRACTS AND LEASES)?
Don't know. Naughty question! Approvals are now for multi-sites and valuation is difficult as there are so many different factors that vary from location to location. You can never say that you are putting something on the optimal site because you can just carry on calculating forever. It's a very fast-changing environment. They are comfortable with their backlog and they are constantly testing (there was some discussion on the technical price of oil and the sales price – I guess this is a hint that this all changes whether operators continue or not?)

IS THERE A POTENTIAL FOR DELAY ON IO.3 and IO.4 IF THEY ARE NEAR IO.2?
IO.3 is targeting >20k bpd. It's only possible to drill for so long and they don't know how long. However, they would be surprised if downturn in volume lasts very long, although companies cannot drill forever.

HOW IS PROGRESS GOING WITH FINDING A NEW CEO?
They have a headhunter in place; the candidate will likely be Denver-/US-based. They would like to get someone in the next two months but it has to be the right person. CF said he doesn't want to do it for too long! IOF has restructured into empowered areas and they have some consultants who give general management support. LB is tough to replace!

WILL FIBREGLASS HAVE ANY IMPACT ON THE PROCESSES?
No, longevity is the only issue (5-15 years)

DO YOU NEED THE FULL WATER APPROVAL BEFORE YOU CAN PRODUCE?
There used to be ones where you could produce straightaway but they are going the correct route; even when they get approval, they can't start straight away. They will not sell water this year.

WHAT IS THE BUSINESS PLAN FOR 2014?
It changes every week. They are focused on iodine. Next year, they will know where they stand with the water, they will know what they want to do with Iofina Chemical and they will have a surplus of iodine next year

WHERE ARE WE WITH THE PRILL TOWER?
It will be in Kentucky and they are in the final stages of the tender process (I think he meant that they were in the final stages of deciding exactly what to tender, not that the tenders were in and they were deciding, but I could be wrong or maybe the tenders were all different and now they have to decide which different version they prefer?). It would be economical to do it and it should be ordered next year.

A QUESTION FROM "CHRIS" THAT I COULD NOT HEAR
A different amount of iodine is needed for different things. We can spend a lot of time ensuring 100% iodine and then the end-purchaser dilutes it. Again, it is all an evolutionary process and they will grab their opportunities and be flexible and can adjust plants accordingly. This is why it is difficult to forecast and to predict. India and China are big areas. The oil and gas separator at Arysta that they inherited did not work properly, but it does now.

WILL YOU BE THE WORLD'S LARGEST IODINE PRODUCER?
If we build 8 plants at 200 MT, that will be 10% of world's supply in 18 months. To be the world's largest producer is a big ask – technically it is possible, but realistically it is unlikely.

TECHNICAL COST OF IODINE VS COMPETITORS?
SQM has fixed prices traditionally. IOF will be among the lowest-cost producers but there are markets ready to open up for iodine. For example, crop spraying in California; iodine is biodegradable and would be preferable. Costs in Texas are higher than in OK and does not want to overstate things as would rather be realistic. Also need to qualify statements because Sod's law always rules.

WHAT ARE THE AVERAGE PPMs?
Maybe

[monty panesar] 19/6/2013 18:55

Sounds positive and realistic from AGM.Thanks for feedback.Near term we have water permit to look forward to which will move from blue sky to reality and will warrant analysts starting to upgrade profits for next year.


H2 is going to be VERY exciting IMHO.

[naphar] 19/6/2013 18:49

Nice summary of points from 1madmarky

On the OPEX question, asked lance afterwards about royalties and had not considered it before, but as revenue per kg goes down, so therefore does the royalty cost and hence the opex. The new royalty agreements seem to be much more favourable due to the measurement mechanics, which helps reduce opex even more.

[naphar] 19/6/2013 18:43

Just got home and caught up with posts. SG and some overs still sat in a bar and will probably be joined for a drink by Lance. So don't expect too many posts tonight, I suspect phones will be going flat soon!

Dig made the point as did I this morning about allowing a longer times ale for ramp up of plant production. CF would not make a general forecast on that topic as so many factors involved. But the oils companies want to pump oil so you can be sure they will have to get rid of waste water. The oil cos work on wells as fast as possible but they can miss targets set.

On coco's point about the missed targets, I kind of share your view, publicised targets have been missed. But, they have also changed the goal posts. It makes good business sense to move IO3 to OK. It makes sense to switch to FRP plants. It makes sense for us to believe (IMO having met 4 of the board now) to believe they have the best interests of the company at the forefront of their minds.

The targets we have "missed" this year, are misses I can forgive.

[1madmarky] 19/6/2013 18:42

Hello,

My take on what I heard at the AGM today.

Full listing - not a priority
Mini plants - design tweeks, will press the GO button shortly
- maybe more than one this year
IO3 - >20,000 bpd available now
water East Montana rights - next month or two
- JV with a trucking company possibly? options open
CEO search - already interviewed a couple of guys. Still waiting for the head hunting results. New CEO in a month or two hopefully.

Plant Lifetime - FRP 5 to 15 years. There will continue to be Titanium components in the FRP units and the standard IO units will be able to take a larger tank (the bit that determines how many barrels per day it can do)

Derivatives plant re-configured depending on what they are producing at the time.

If an IO plant gets clogged up with oil etc etc - reverse flush takes 2 hours but normally don't need to bother just carry on.

Suppliers take 2 months to fabricate a FRP plant and we have two suppliers which suggests a max of 12 IO plants per annum.

Will sell raw iodine in 2014.

IOF has no competition at present.

Lance down player IOF's capability significantly during his trip to Chili.

Oh, Lance is only working 30-40 hours per week.

Can't remember anything else, and I don't guarantee the accuracy of the above but it's what I remember.
GLA

[naphar] 19/6/2013 18:36

Lib, on patents, one of the main ones they were waiting for was tweaked to change a few words, which then made it acceptable. Payment has been made, about a month ago. It can take from 1-4 months from payment to official grant. Lance can't understand why anyone would be saying hey will not get the patent. He grant of hat patent will apparently be rNS'd.

[n3tleylucas] 19/6/2013 18:33

AGM's, investor meetings, pub meetings all bullish ... RNS's all bearish.

202.25 hit today, a whisker away from my 201 prediction. Once that's smashed we go 169/170.

Bring on the margin calls, take out the stops. Let it begin.

[the librarian] 19/6/2013 18:30

Any mention of the patents, or further explanation of the earlier mentioned conventional oil play next to their acreage? Would like to know a little more about the oil considering the majority of plays are from the shale. I suppose it is not a high bpd otherwise it would be displayed everywhere?

[square1] 19/6/2013 18:30

Feeling exceptionally relaxed about developments. The next 6 months will open a lot of eyes IMO and I am far more confident about delivery. OPEX is going to keep on falling and IO#3 sounds like it's going to be a blinder. Let the traders play the outlook is very good.

[uppompeii] 19/6/2013 18:26

Before Netley says it...didnt The Titanic have a party atmosphere? lol

I should think the Bod are far less concerned with the share price than the majority here, 40p to 200p in a year, thats not too bad is it?