Iofina Share Discussion Threads

[superg1] 06/5/2015 18:59

Bog

Io1 is said to have been below what it had previously done. The target has simply been left as it is, and I agree with RH.

The difference for Q2 will be increased yields due to the brine temperature being higher in the spring. All things being equal, if they dealt with the same amount of brine at all plants then Q2 production would be higher than Q1.

Q2 and 3 should be the best yield periods with Q4 and Q1 lower simply down to brine temperature.

[bogg1e] 06/5/2015 17:17

perhaps they are accounting for variations in brine disruption. It seems to me that the figures quoted til end of june suggest the disruption will continue til then, otherwise, we would expect to see calculations based on about 70 tonnes per month, which is what Io2-6 are capable of. Don't forget the estimations for the next 3 months will not include IO1 input at 3-4 tonnes per month.

[roboben] 06/5/2015 17:12

Setting a target that's easy to beat!

[rhwillcoll] 06/5/2015 17:11

Fresh: I think it's called "under-promise and over-deliver" - ie the exact opposite of the previous inept management. Much prefer it this way.

[freshvoicem] 06/5/2015 16:49

Just rereading the report of 1st quarter results and surprised to see that they are setting target for 2nd quarter at 97 to 127mt. I would have expected with the figure for the first quarter, with March being a record month and weather improving and continual tweaking the target to be increased. Anyone have thoughts on this?

[che7win] 06/5/2015 14:33

Xtr up 6 fold, still looks cheap, just watching.

[che7win] 06/5/2015 13:58

At current oil prices, some frackers will be considering expanding, oil is well balanced at around $65 WTI.

[bogg1e] 06/5/2015 13:31

Cheers Fresh and SG.

[superg1] 06/5/2015 13:24

Bog

From H1 results to the October ($7.5 mill) comment there seemed to be just over a $1 mill gain. The $7.5 mill was rumoured before it was said and possibly a bit more in receivables due then which would push it up.

It was also said the cash was increasing month on month and we know costs should have dropped a decent amount in H2, talk of drops in costs of up to 2 mill.

We know io5 and 6 needed some tweaks, but certainly going by what has been said it should be good.

We wait if see if they hit the forecast 35% increase in revenue, but they were already up over 20% at the time of saying it.

[freshvoicem] 06/5/2015 13:13

Boggle
Welcome back!
PLEASE be a good chap and do not respond to Nutters aka ACT.
Everyone else has filtered him and not responded recently and this seems to have the desired effect of after talking to himself for a few hours he goes away

[bogg1e] 06/5/2015 13:01

Netters. Regarding 2014 year end. I twiddled with figures and I'm assuming break even for the year. Broadly speaking, H1 2014 was still loss making and H2 2014 turned to profit. I think from my calcs I had them at $500,000 up, but there are too many variations/moving parts to be sure, so I'm assuming break even.

[superg1] 06/5/2015 12:09

A line in that lengthy RB monitor report out on 5th May.

'Sirocco Mining Inc, and Q11 Metals Inc, have been omitted from this cash flow forecast as it is forecasted that their opening cash and cash flows will be approximately $nil during the period.'

[superg1] 06/5/2015 12:05

hXXp://www.afr.com/business/copper-rallies-on-chinese-economy-hopes-20150506-ggv5uu

Hopefully copper will continue to see a bit of recovery in prices, which will mean the peso will strengthen causing cost increases for iodine producers.

[joeblogg2] 06/5/2015 11:50

Looks like a bit of buying ahead of results??

[superg1] 06/5/2015 11:30

Roger

Cross did the sums a while back and is probably waiting for the results to look again following the iodine price drop.

There are quite a few variables out there at the moment including IOF potentially running SWDs or a JV to do that.

[rogerbridge] 06/5/2015 11:16

I am bullish on the prospects for IOF going forward.
We are the lowest cost producer and that is recognised some leading competitors.
Water application should be approved and many are waiting until then to invest.

What the market and investors in general do not appreciate is the value of the chemical division. It really is a good income generating outfit.
It manufactures some sophisticated and niche chemicals and margins are good by the look of it. SG could probably do the sums here. It also produces the run of the mill stuff but is heading increasingly to the high margin products.

[superg1] 06/5/2015 11:12

Meb

There are a number of factors in play over the next year, some imminent.

RB ENERGY

I'm assuming the iodine must have stopped with receivers now in place. It seems Tewoo will have first shout on any inventory left as RB took forward payments for lithium and used the iodine mine as collateral.

RB supplied zero iodine in H2 2013 and sold 476mt in H1.

In 2014 that left them with 800mt in the inventory.

By the end of Q3 2014 RB sold 1018mt (produced 800mt) leaving them with 600mt in the inventory, but they excluded January as that was the T/O time re RB.

Since then it's all gone badly wrong as you know with RB iodine production highly likely to disappear. The inventory situation created a false bulge re their supply ability.

I read somewhere about an estimate of 400mt in their inventory for the year end, so that would have put them on sales of around 1600mt over 3 times what they supplied the previous year.


SQM

As detailed we know they shut a mine and plant (now restarted) which means about 1700mt less production for them.

In their report as posted recently they showed production to be the same at one mine, yet the ore they processed had dropped 17% which should have meant 1000mt less production. As the report was compiled by the corrupt lot (now booted out) I don't think we can trust the figures.

Acf minera will be chugging along on it's 2000mt as always.

Algorta Norte had planned to get to 4000mt but suggested it would be 3000 in 2013. Costs for them seemed to be $35 to $38 per kg at the time (figures released by them). The peso has weakened but other costs are up. SQM suggest some Chile producers are losing money. That should be Algorta and SCM Bullmine who use seawater. There was talk that both had pulled back on production.

Algorta face a challenge in the Supreme court which may see them losing the use of their seawater pipeline at it's out-take point.


The main issue has been Cosayach who in 2013 went production mad through theft of water (SQM's water). As we know that was resolved with wells closed. That doesn't mean Cosayach didn't carry on later. Cosayach now have a seawater pipeline but surely that will have put costs up above the current price.

As we now know Cosayach had been recording iodine sold as $26 per kg when it was double that. The Chile authorities spotted the false invoices and found that Cosayach avoided US $82 million in tax. The case is in play now and should get good coverage over the next month or two. Cosayach can be fined up to 4 times the fraud amount. Then add on the US $70 mill award and US $120 mill award to 2 banks against their group of companies.

SQM behind the scenes knew the Cosayach situation was coming and believe it will end Cosayach. Iodine is their main income so SQM have dragged the price down to destroy their cash flow, and to devalue the company.

It's all very obvious, and now stated in many places.

What the market sees is an over-supply of iodine, but in truth they don't see that either, as all the market looks at is historical cash flows, with little interest of where a company may be at fundamentally.

So we know SQM are -1700mt possibly more

RB supply rate about 1600mt in 2014, and should be less than half that this year, with none next year.

SQM forecast demand will be up 1400mt this year. When the price drops basic demands like disinfection increase as iodine derivatives are the A standard in the sector, but demand dropped as prices went to high with alternatives used.

So there is a lot of potential negative impact hovering over the supply ability of Chile producers.

The price will probably rise when SQM decide to raise it. The Cosayach case will see progress over the next 2 months. SQM's aim imo is to get Cosayach on the cheap, not so much for iodine but for their lithium leases and to stamp out what has been a thorn in their side for some time.

With both Cosayach and RB out of the way, the next major is Algorta who have much higher costs (seawater), so they pose no threat to SQM.

[arlington chetwynd talbot] 06/5/2015 10:58

Super Graham One,

Is it true that you are predicting a pre-tax profit for 2014?

A simple YES or NO will suffice, no sermons please.

[che7win] 06/5/2015 10:51

Peso appreciation will work wonders for iodine this year....

[bocker01] 06/5/2015 10:40

SG, with all the mayhem you've discovered surrounding the other producers, more like something from a novel than real life plus our water application and likely water denials in Chile things couldn't look more healthy in the short to mediunm term. The last two years may have been pretty bad but the next two are going to be stunningly good. Can't really see a better three-year AIM stock, not one capable of such a sustained continual rise as I think we'll see here, right now. Of course the iodine price going back up with the Chilean games out of the way and RB's collapse is just so more to look forward too. IMHO.

[superg1] 06/5/2015 10:29

Bocker

With all the SQM comments re pricing it does just seem to be a matter of time before the business and revenues expand healthily.

As a reminder they actually said the price drop was their strategy to regain their original 1/3rd market share.

They knew both RB and Cosayach were in trouble and had inventories so slashed prices to stifle cash-flow for them. The intent I'm sure is to take out Cosayach just when the fines and court orders are hitting them.

EG

The monitor report yesterday for RB energy spelling out the end. I estimate RB supplied 1600mt of iodine last year. 1200 produced and about 400mt of inventory.

hxxp://www.kpmg.com/Ca/en/services/Advisory/TransactionRestructuring/CreditorlinkSites/RB-Energy-Inc-Quebec-Lithium-Inc-et-al/Motion%20Materials%20including%20filed%20Affidavits/20.%20Motion%20for%20the%20Appointment%20of%20a%20Receiver%20May%205,%202015/Motion-for-the-Appointment-of-a-Receiver.pdf

[meb123] 06/5/2015 10:23

Thanks SG , most illuminating. Are you able to clarify whats happening in the iodine market . We know the world demand ( i think SQM have stated it )-now are we saying the production in 2014 overall together with the inventories matched or exceeded world demand? I assume that is the case as this is one of the factors leading to a decline in the price . If that is so, has the position reversed for 2015?
Cheers
Meb

[bocker01] 06/5/2015 10:16

Be interested to see what the final six months of 2014 doubled are. Probably likely to suggest a current year PE of 15 or so ignoring the iodine production increases (2015 will = 2014 doubled)/cost reductions from existing plants (USD30 heading towards USD 17). Chemical plant sales growing strongly too. Brokers report and presentations outlining growth plans to follow. Think we may be in for a significant bounce over the next couple of months.

[escapetohome] 06/5/2015 08:04

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