Iofina Share Discussion Threads

[roundup] 09/6/2015 11:12

Maybe what they lose in oil revenue they will gain in lawyer's fees. This is a real bonanza for lawyers, unfortunately a great loss of revenue for Iof.

[superg1] 09/6/2015 11:03

Fresh

Montana relies heavily on oil revenue. At one point in recent times they introduced a tax holiday to encourage oil exploration.

Look what Montana folks said about that holiday.

Montana’s communities cannot afford the costly oil and gas tax holiday. From 2008 to 2012, the tax holiday cost the state and counties alone $152 million. Our local governments also experienced a $73 million loss during this period. These are dollars that could be invested to help communities deal with the immense impacts of resource extraction- allowing Montana’s towns and cities to meet the demands of the “boom,” while also preparing for the inevitable “bust.”


Now imagine a concerted effort by IOF to have existing permits rescinded which have in reality been awarded illegally against the rules.

The above paragraph tells you it would send Montana local governments and the state into a tailspin.

So what do they do, sort the permit or potentially cause huge disruption to the oil industry and their state.

There is plenty of oil activity the Alberta Bakken in Montana so it's not just about Bakken/3 forks drilling.

[odvod] 09/6/2015 10:56

2nd option - IOF dares and invests into increased production at the sweet spot at extremely low production price (and makes profitable production) and shortens the life of the unfair competitors. At the cost of the increased financial stability risk.

[odvod] 09/6/2015 10:55

1st option - IOF is conservative and waits for the market to stabilize before invests into new production capacity and saves cash for the debt repayment

[superg1] 09/6/2015 10:54

Nashwan

re

'I'd really be interested to know what the BOD and their lawyers think of your rationale.'

and

'Similarly my logic would be to approach Montana with a "can we talk" and "can we do a deal avoiding legal resort" before getting formal'

I have sent some very useful bits.

Generally from things I can't mention (contact with others besides IOF)

The first line of yours.

I 'think' they consider the decision outrageous and are very passionate about getting it turned around.

On the second line.

I 'think' it's not so much an approach but a steamroller re other permits that have been awarded and that theirs should be awarded.

While a few sit and moan others have done some research, and are aware of the general approach in play.

[ansana] 09/6/2015 10:51

Yep I reckon it's all hands to the pump at the DNRC. Can't say I have much sympathy for them.

[captain_kurt] 09/6/2015 10:45

Your right Super. If this is allowed to stand then all present water permits in Montana are illegal.

[che7win] 09/6/2015 10:38

Interesting posts superg,
the law needs to catch up with the reality of water usage, I guess we are now a test case.

We rightfully deserve the water under previous precedents, so let's see what happens.

I'm sure Montana doesn't want to lose out on investment.

[freshvoicem] 09/6/2015 10:34

SG
Is Montana one of the 'green' states?
Is there an anti oil lobby? With the G7 deciding on phasing oil out over next 25 years the greens will be on a ride at present.
I don't know enough about the politics of the state.

[nashwan123] 09/6/2015 10:02

SG
As always enjoy reading your detailed research. I'd really be interested to know what the BOD and their lawyers think of your rationale. I used to do a bit of negotiating and very often much could be achieved through informal contact outside a meeting. Similarly my logic would be to approach Montana with a "can we talk" and "can we do a deal avoiding legal resort" before getting formal.
Sometimes individuals can be bull headed and see it as a personal attack and happy to be in a battle. Others who have the wisdom to leave petty emotion aside will talk reasonably and rationally with a view to a settlement.
IOF have nothing to lose trying the informal route first!

[che7win] 09/6/2015 09:31

Those AT trades are relentless....

[jbe81] 09/6/2015 09:09

Superg, what is your timeframe for sharpish?!

[superg1] 09/6/2015 09:05

If you recall I mentioned the unfair apparent rules and the impossibilty of listing required amounts.

EG

For Municipal use and others there was an add on into the rules saying they were exempt and could apply for permits for a future use with amounts needed unknown.

The real kick in the teeth is that any time they can ask for a change to supply others including the oil industry.

The important bit.

Having found it was impossible for those applicants to comply with the Montana beneficial use rules they introduced a bill in 2010 to add in the exclusion of those type of permits.

So taking in the findings of the study of the Montana water policy a bill was introduced to sort out that impossibility problem.

Now the denial of the IOF permit has raised the same issue.

All current water depots have been awarded permits against the rules laid down, none of then comply with what the HE said in the case of IOF.

I understand IOF can challenge all existing permits and get them withdrawn based on the fact they should never have been awarded. All fail the beneficial use rule.

So now Montana has a choice it seems. Withdraw all the permits and scupper the oil industry they have, or sort out a bill sharpish exempting the full details needed re water use and amounts, just like they did in 2010 for certain sectors.

Personally I think under the circs the IOF permit decision will be turned on it's head and potentially in quick time without a judicial review.

That fits very nicely with what the Montana Legislative services said when reviewing the water laws.

Recommendation:

In future interims, the WPIC should evaluate the current water plan, determine what parts are still relevant and what sections need updating, and, if possible, suggest ways that the water plan can be updated to meet the future water needs of Montana.

[superg1] 09/6/2015 08:48

Some very interesting lines in a study of Montana water policy. I suggest those interested read this (my comments in brackets)

Published By Montana Legislative Services Division

Finding:
Significant portions of the state water plan have not been reviewed or updated for nearly two decades.

Recommendation: In future interims, the WPIC should evaluate the current water plan, determine what parts are still relevant and what sections need updating, and, if possible, suggest ways that the water plan can be updated to meet the future water needs of Montana.

Water marketing

Finding: Current law, 85-2-310, MCA, does not allow the marketing of water without first identifying each user, each place of use, and each contract. While this provision is a curb against speculation, it prohibits the marketing of water for mitigation or aquifer recharge in an area where the new user
is not yet identified.

(an exclusion has since been added for the last part)

Recommendation:
Current law should be revised to allow water marketing without contracts in place,but only for the purpose of aquifer recharge or mitigation. For an appropriation right that retains the original beneficial use, the flow rate and volume of water allowed at the point of diversion must be equal to the flow rate and volume allowed under the initial beneficial uses minus the amount that
was sold or marketed for mitigation or aquifer recharge.

(They have done that)

Beneficial use.

(It lists some states which include less onerous beneficial use needs)

However states choose to define beneficial use, some may consider it still a "vague judicial concept", the determination of which will be decided in court as uses and priorities evolve.

General comment

Nearly four decades ago, a group of Montana's finest minds gathered in Helena to talk about water law and its relation to the economic development of the state's water. Some advocated for a central system to keep track of water rights as they were issued and, inevitably, as they were changed to meet new demands for water.
"We must remember that we have to have something to meet these changing times," Bowman said,"because we have had changing uses of water from the time people came into the state until now.

[che7win] 09/6/2015 08:43

Quite a lot of AT trades this morning, haven't seen that in a while.

Someone accumulating me thinks.

[superg1] 09/6/2015 08:05

That brings me back to the SQM news.

They said they turned the Iris plant back on in August 2014.

Generally they produce around 6000mt at NV with that plant running.

In the year end news they reported 6000mt was produced, but they also showed that 17% less Caliche was mined.

They also claim they expanded the NV mine.

Form 20-F comments

During 2014, we had total capital expenditures of US$112.1 million, primarily related to: development of new extraction sectors and production increases for both nitrates and iodine at Nueva Victoria; (other non iodine areas listed too)

In 2012 they mined 24 mill tonnes of caliche to get 6000mt of iodine at NV.

In 2014 they claim they did 20 mill tonnes for 6000mt of iodine.

Iris was shut until August which should have meant a drop in production. The Caliche variation should have meant 1000 mt less iodine. Either they have their Caliche figures wrong, or they are lying.

[woodpeckers] 09/6/2015 07:50

"The only major new contributor is IOF.

As it stands a supply shortage is coming. "

"So why do any off-take agreement with anyone long term at $30. Tell then to sod off as it seems inevitable that the price will take off at some point."

Excellent posts SG. We really do just need to bide our time.

I think the board should be putting all their efforts at the moment into tweaking production from the plants we have and getting one or two mobiles up and running so that they can iron out any difficulties with them, that way we can hit the ground running when the inevitable happens.

If they can also increase the range and find new customers for products at IOC in order to use the excess iodine we are now producing that would be far better than selling it in to the market so should be a priority.

[superg1] 09/6/2015 07:32

1MM

Glad someone has been paying attention.

This recent news will have been known by SQM for some time.

You are right they need that Cosayach pipeline. They made no plans for their own pipeline as they were set to move to Pampa Blanca in 2014.

As can be seen the perception of a possible risk of losing those water rights is very real. Also in the news it mentions further claims/allegations to come from other sectors.

If those rights are suspended SQM are more or less screwed. They would have to open up the expensive mine and that would take time, but then they would have to raise the price of iodine. That mine and others don't cover what they produce at NV.

[1madmarky] 09/6/2015 07:09

It certainly suggests that getting market share back is just a convenient cover story. While the real reason (IMHO) for desperately trying to kill off cosyach is that pipeline. So still all to play for. GLA

[dodopoo] 09/6/2015 06:57

Just wondered if anyone has had a look at Oilex-oex.About to start generating some cash,although funding is holding back share price at moment.Would appreciate opinions from the more knowledgeable on here.

[superg1] 08/6/2015 23:58

All the above bits and risks are mentioned in old posts try searching Tamarugal etc.

Here is one snippet from an old post. It's a paragraph from SQM's risk list

'In connection with our current investments at the Salar de Atacama and Nueva Victoria, the success of these investments is dependent on the behaviour of the ecosystem variables being monitored over time. If the behaviour of these variables in future years does not meet environmental requirements, our operation may be subject to important restrictions by the authorities on the maximum allowable amounts of brine and water extraction.'

As said, the Chile Government brought in powers late last year where they can suspend water rights to protect the nature reserves.

A nice bargaining tool for IOF re off-take agreements. If end users sit back and wait for the outcome of that story, and it goes the wrong way for them, then it will cost them a fortune.

I will watching that story like a hawk.

[superg1] 08/6/2015 23:32

Making some sense of it as Pampa hermosa is a new name for me.

'The "Pampa Hermosa" project of the National Company Soquimich (SQM) seeks to exploit the Salar de Llamara, in the commune of Pozo Almonte, Tarapacá Region.'

I know for sure Pozo Almonte is where SQm have their main iodine mine Neuve Victoria which is 6000 mt of production.

From the SQM website. It sounds like the site is more important than I thought.

This is the area where Cosayach were prosecuted for environmental damage and had wells shut down in 2011 and 2014 due to the damage to the Tamarugo.

'The Salar de Llamara is classified as a priority site in the Regional Biodiversity Conservation Strategy of the Tarapacá Region due to a native tamarugo (Prosopis Tamarugo) forest and lagoons with stromatolites located there.

As part of the Pampa Hermosa project, SQM uses its Environmental Monitoring Plan to observe a series of environmental variables in order to ensure that the project’s activities adhere to the provisions of the environmental assessment. The company monitors tamarugo vitality using high-resolution satellite images taken each year in November, when the greatest amount of vegetation occurs.

Our efforts in this area also include repair and compensation measures such as irrigation, plant production, tamarugo planting, phytosanitary programmes and off-site conservation of tamarugo germplasm.

[superg1] 08/6/2015 23:18

Btw

If the authorities take action and suspend their water rights to protect the national reserve and locals, the iodine end user world is completely stuffed.

This is the area where Cosayach nicked SQM water from the aquifer and did cause damage.

It seems from that report that damage is being caused anyway under normal production by SQM.

While it was always a possibility re the suspension of their rights, it seems it's very real and current threat right now, and the risk factor just ramped right up.