Iofina Share Discussion Threads

[napoleon 14th] 24/3/2015 08:14

If I were Potash, I'd bid for & buy IOF first.
Then pick up SQM for a song!

[superg1] 24/3/2015 07:47

SQM

Chile's tax office files lawsuit against SQM
By Juan Andres Abarca - Monday, March 23, 2015

The decision paves the way for the public prosecutor's office to investigate the company regarding alleged illegal political campaign financing.


That's the nightmare SQM were trying to block. It's a subscription only site so that is all the detail I can see there, I'll hunt for a Spanish version of the report.

SQM had tried to block that event by handing over some accounts and went to court to block an investigation.

If it's true and a full investigation is going ahead, then Chile bosses and a load of politicians will be serious trouble.

[superg1] 24/3/2015 07:32

Peterz

Some fund managers went almost entirely to cash and there have been plenty of circulars in recent times commenting on opportunities should appear on some under-valued stocks.

Which sectors they go into is guesswork. No doubt they will have been trying to work out which oil companies are best placed for a bounce.

[1madmarky] 24/3/2015 07:27

Re : RB and the leasing companies, it does sound like a chronic shortage of cash, if so it suggests that the other producers will be in the same position. So SQM may have done the damage to the other producers that they were to do already. AIMHO

[che7win] 24/3/2015 07:02

Peter,
Plain to see the main market stocks are no longer cheap.

If you look at the AIM chart for largest 100 stocks, it's been steadily rising this year after falling last - AIM hasn't joined in the euphoria of the other stock indices but the chart shows money is coming into AIM stocks.

[peterz] 24/3/2015 03:18

che - do you have any reason for thinking that or is it a haunch?

[che7win] 23/3/2015 19:40

Well,
Times are getting interesting here.

I reckon the AIM is due a rerating, AIM has been in the doldrums over the past year, it is time for catch up.

I think a lot of hot money is going to be spilling over into AIM this year, we are set up for a nice rerate here.

[monty panesar] 23/3/2015 19:27

SQM are subject to US Law as the stock is quoted in New York. It will cost a lot of time and money. I remember Shell had a shareholder class action against them a few years ago for mis-stating their reserves. This was as a consequence of having their shares quoted on the NYSE.


SQM aside, the water examiner has had the final submissions for 2 weeks now so news could come soon.

[superg1] 23/3/2015 19:22

It looks like industrial minerals have made the same mistake too.

"SQM's results show how low prices have offset a rise in sales volumes in response to higher demand. Even though iodine prices are subdued, the group is working to increase its market share and overcome this hurdle."

DYOR Analysts and all these media reports are a waste of time, they just spout what they think is going on, instead of doing any research. Worse still folks pay for it.

[superg1] 23/3/2015 19:11

Good old SQM. I said I thought they were misleading the market by never announcing that they had closed one iodine mine and had shut down a plant. That happened in Oct and Nov 2013.

I thought I'd double check to make sure I had't missed the announcement of the closed mine in case it came up in news other than quarterly results.

Aha I thought, I may have missed it as on 2nd December 2013 straight after both were closed SQM released news

'SQM Principal Markets Update'. Obviously I had missed it, and it must be in that news I thought, but look...

'In regard to the iodine market, SQM’s sales volumes for the fourth quarter of this year are projected to be slightly higher than the third quarter. The average prices observed for thus far in the fourth quarter were slightly lower (2% to 3%) compared to the average prices seen in the third quarter. Considering the supply and demand we have observed in the market, it is projected, that
for the first quarter of 2014, the company will see slightly higher volumes and lower average prices (approx. 5% to 15%) than those expected during the fourth quarter of 2013.


They released news suggesting volumes would be up in 2014 right after they had closed that mine and never announced it as closed.

I can't see any other way of reading that other than it was a deliberate attempt to mislead the market about their iodine production.

They clearly didn't want competitors to know what was going on, but in doing so misled the market with what looks like a false update.




On page 55 of their 359 page form 20-F, at the bottom of the page in small print is where it appears.

'Operations at the El Toco and Pampa Blanca mines were temporarily suspended in November 2013 and March 2010 respectively. Operations at the Iris Iodine Plant were temporarily suspended in October 2013.'

Over 700 staff went at that time (now over 1000) so there wasn't anything temporary about it.

[superg1] 23/3/2015 18:10

Gad

Here is the relevant part answered by the now ousted CEO.

Santander, Equity Research
Patricio, could you please explain us what happened last year in the iodine business, that volumes didn't grow? And you said you plan to gain market share, did you have capacity problems? Or with current prices, do you plan to expand your production lower?

Patricio G. Contesse - Chief Executive Officer and President
Okay, first of all, iodine. We had a very strong first quarter in 2013. Now if we look at the other quarters compared to the quarters of 2014, we think we gained some volumes. But in this -- not seen if you take the year completely, the first quarter of 2013 was very, very high. If you take that quarter out, then we increase volumes.

Now if you look at the figures

2009 Produced 10,100 t sold 7,200 t (inventory + 2,900mt)
2010 Produced 8,800 t sold 11,900 t (inventory -3100 t)
2011 Produced 10,000 t sold 12,200 t (-2,200 t)
2012 Produced 10,900 t sold 11000 t (-100 t)
2013 Produced 10,800 t sold 9,300 t (+1500 t)

2009 had a drop because of the market crash but in 2010 the end users that had held off now stocked up.

Then early 2011 the Japan earthquake and Cosayach production disruption hit, iodine prices took off and SQM cashed in their inventory.

That continued into early 2013 as evidenced in the conference call.

The real reason for the drop in sales in Q2 to Q4 2013 was so that SQM could build up an operational inventory, as they intended to close down the high cost mine (Maria Elena aka El Toco) and a production plant (Iris plant). They did close them both and mentioned it in their form 20-F in the small print (closed Oct and Nov 2013). That mine and plant were doing about 2,500 mt.

Take that off the 10,800mt and they should have produced 8,300mt for 2014, when analysts thought they were aiming to get back to over 30% of the market.

The analyst's comment.

"If you have reliable information about the stoppage of their mills would be useful"

"They state iodine total capacity in 12,500 tons. If you don’t consider Maria Elena any way they will be around 10,800 t. What am I missing?"

So you can see before I mentioned the close of the mine he thought they would be near their 12,500 mt capacity. Then he mistook the 10,800 mt figure given as what they would have done in 2014 with the mine closed. So he wasn't overly amused when I pointed out he needed to take 2,500mt off the 10,800.


He also said he hadn't heard about their water rights but didn't think they would be ended, but that admitted he doesn't know where SQM get their water from.
He also said he knew Cosayach, and that the pipeline I mentioned was for Algorta as Cosayach don't have one.

Algorta are nowhere near Neuve Victoria and the pipeline does belong to Cosayach, I sent him the link.

So it just shows, the analyst was trusting what SQM were saying and passed that on in his investment recommendations.

What I don't get, is why for so long they didn't seem to realise the damage the Penta case was going to inflict on SQM. We chatted about it here for many weeks before the lid blew off.

[neddo] 23/3/2015 17:14

volume and price encouraging, dare we think ?????

[grahamg8] 23/3/2015 17:03

Superg. If the Directors claimed production was rising in a conference call when it wasn't. Then that is share price manipulation, and illegal in the UK. Perhaps they can get away with it in Chile. A period of hard labour in the brine mines seems to be indicated.

[bazzerp] 23/3/2015 16:59

Montana DNRC detail pages for 40S-30066181 still not accessible.

[superg1] 23/3/2015 14:14

Jointer

It's Santander that responded and engaged with me. I sent them the various details from SQM reports. It was those guys that thought production was up not down due to what was said. Interesting therefore that they are the one's that recorded underperform.

I note they have used the resignations as the reason, better that than admit you hadn't kept track of what was going on.

[freshvoice] 23/3/2015 12:41

23rd March
Case SQM: Ponce Lerou silent to get to declare the prosecution for any crimes of corruption

The Clinic Online March 23, 2015 Tags: prosecution , Power , Ponce Lerou , SQM Photos: Agency One

Share it Tuitéalo
The owner of the mining swiftly entered the building in General Mackenna, no statements to reporters stationed on site. Expected answer for ballots with policy that could constitute "aggravated bribery".

July ponce A1

The SQM chairman Julio Ponce Lerou, reached the offices of the Attorney past 8:30 am on Monday, quoted in the context of the investigation into alleged irregular company contributions to political campaigns.

This, after the prosecution periciara accounting documents of the company provided by the Internal Revenue Service last Friday.

The employer swiftly entered the building in General Mackenna, in downtown Santiago, no statements to reporters stationed on site.

The citation of the former son of Pinochet happens after the "refusal to the voluntary surrender of the financial history of the company," which won last veirnes Prosecutor after pressing the SII , even take it to court.

Among the documents that are expected to respond Ponce, false ballots are ideologically linked to former Undersecretary of Mining, Paul Wagner, plus other charges for close parliamentary Fulvio Rossi (PS) and Ricardo León (DC) investigated, those who consider "fundamentals to investigate the crime of aggravated bribery".

[jointer13] 23/3/2015 12:35

corrupt

"Future prospects may be bleak for SQM, with Banco Santander rating the company’s stock at “underperform.” Analysts wrote in a note to investors Wednesday that the sudden resignation of Potash Corp.’s board members represents “a major concern.”

[superg1] 23/3/2015 10:30

RB Energy.

The bid process ends this week, so next week we may know what is going on there.

I don't know if the following actions are normal action pre bids, perhaps someone here does.

About a week ago I noticed Caterpillar had made a court request for a temporary lift of a stay of proceedings so they can recover leased equipment. They stated RB against what they had indicated had stopped paying lease costs and were failing to maintain the equipment.

Over the last 6 days another 4 companies have applied for the same lift of the stay of proceedings.

[superg1] 23/3/2015 09:42

Phoenixs

Those are my thoughts too. The SQM strategy has been too influenced by their hate of Cosayach.

If you look at conference calls and news, SQM put the price drop down to increased production/competition.

Then in the Q3 14 news they added in a line showing the price drop has been engineered by them.

'As we have mentioned in recent quarters, the lower revenues in this business line are the result of lower prices. We are working to recapture our market share, and market prices have reflected these efforts.'

I couldn't understand why analysts didn't jump all over that comment in the conference call for that news.

To me it meant they were dropping prices to force others out of the market. They were able to achieve the lower price due to closing a high cost mine, and the favourable exchange rate.

If you check old conference calls SQM were very evasive on the topic.

It wasn't until the last conference call that it dawned on me what was up with the apparently stupid analysts.

They took the lower prices being connected to SQM increasing production to grab a 30% market share. That assumption is reasonable if you had done no research.

Then come the last conference call an analyst asked outright about production and the answer he was given implied that volumes were higher. It was an attempt to indicate that production had risen. The answer was intended to deceive those involved in the conference call and it worked.

As they have been so cagey in recent results and have lied, I'm now wondering if they have breached some sort of regulations regarding their pricing action and destruction of shareholders investments.

By going into a price war to stop others they have lost anywhere between $100m and $200m of profit on iodine.


As pointed out if SQM decided the price of iodine was $40-$50 per kg for their product then that's what they would get, as no one has the iodine production to fill that gap at any price.

SQM have simply tried to destroy Cosayach RB and others in a price war, but in doing so have significantly affected their profits.

I don't know the legalities, but is it legal to control the price to devalue a company you wish to buy?

Certainly their conference call comments by the nature of the deception, tends to indicate they have over-stepped the mark somewhere.

[che7win] 23/3/2015 09:24

Got my read across for DFS, sold today.

[phoenixs] 23/3/2015 08:51

If SQM are taken over, we can at least expect management to try to run the company with underlying profit in mind and not making market share their seemingly sole objective. I suspect that the induced fall in iodine prices was done for short term cash flow only because the existing board of SQM needed funds to pay out legal costs and penalties. They really have shown themselves to be immoral, greedy and worst of all corrupt. It would not surprise me to see iodine prices begin to rise soon.

[superg1] 23/3/2015 08:10

SQM as it is seems finished

I think Potash corp will T/O SQM and cut out rot within it.

[superg1] 23/3/2015 07:52

If you read this one Fresh it sounds like there is going to be a absolute chaos.

[freshvoice] 22/3/2015 20:12

Latest from Chile. They must work on a Sunday? Not sure of google translate, anyone know of better translate service?

March 19

Contesse attorney tries to stop the onslaught of the Office. That same day the case is known to cross borders. US two legal firms begin to recruit shareholders to file a class action.

March 20

After defending his position by the statement of its director Michel Jorratt finally IBS delivers to the Prosecutor's accounting mining. That same day service announces that allege next to MP appeal against Contesse.

March 22

Fisca bundles decides to summon to Ponce and Contesse.

[naphar] 21/3/2015 19:22

I am on an email discussion with their web developer. They went live with a total website overhaul yesterday apparently.