Iofina Share Discussion Threads

[superg1] 16/6/2015 14:24

Monty

The range of plants varies from the gem of io2 to the dog io3. When you still get a good opex on decent production then that means io2 is the low with io3 at the high end, thus one or two must be under 15.

[superg1] 16/6/2015 14:21

MM3

Looking back I see iodine price chaos when Cosayach lost 4000mt of production and Japan supply was interrupted.

Having looked back SQM had quite an inventory but kept that quiet and threw it into the market at high prices.

So here we are 4 years on with Algorta the only real added contributor, but with SQM producing less now than back then and RB just gone bust. The supply should be getting tight shortly or equilibrium as SQM put it.

How did it get to equilibrium when nothing in terms of actual supply changed, as RB have only just gone bust and had inventory left.

Months ago SQM talked of significant over-supply and now balanced, it's called inventories, and they are now diminished, with far worse than 2011 ticking away, but now we are actually producing iodine and have sites ready to go.

Meanwhile SQM talk of a 31,600 demand last year and an expected 1600mt increase this year. Chile supply was said to be 58% (18,330 mt) and I can't see Japan or elsewhere covering the 1,600mt, so it should be 20,000 from Chile.

SQM 9,200, Algorta 2,500 (estimate from export data), ACF 2000, Bullmine 500. It would need Cosayach back to 6000mt just to cover it. However they were nicking 400 litres of water per second. Yes they now have a seawater pipeline but look at the figures.

'The project aims to pump 4 million cubic meters of sea water per year'

That's 127 litres per second and way below what they were stealing.

So roll on Cosayach going bust, and a thumbs up vote for the Chile gov and environment agency closing down SQM wells at NV. Both seem likely.

I'll be keeping a close eye on developments there. Then I wonder where the heck the end user market is going to get 1000mt extra production per year in the coming years, demand has gone up about 3% every year, for 10 years.

[roundup] 16/6/2015 14:12

Lance and Tom must be doing the business today.

[meb123] 16/6/2015 14:00

I would be interested to know , in the worst case , if iodine prices remain the same but IOF are able to maintain output at the current rate- will 2015 show a bottom line profit or not ? Any views?

[meb123] 16/6/2015 13:57

Well Its refreshing that the discusions are moving away from water at least and contemplating iodine prospects . I think we all got to be resigned to the fact that this is a long-termer and the main thing is te the path of progress over time . I would say ( although i got in around January 2014 at around £1) there has been progress from theoretical plants to plants enjoying good output now. Just need for a pickup in the iodine price now and more traction on ramping up output further . Maybe we will get more info on the latter at the AGM.

[monkeymagic3] 16/6/2015 13:36

che7win 16 Jun'15 - 12:26 - 33710 of 33717 1 1

monkey....I hope no one listens to bears or bulls but engages their own brains and does their own research.



At last we agree. If people engaged their own brains and didn't feel the need to constantly refute other peoples points of view, maybe the collective research wouldn't produce the result we have seen here.

No doubt you will need the last word Che so will leave that to you.

Regards

[chapv] 16/6/2015 13:16

As I am quite simple I looked at it this way. All things being equal a 5 million loss on about 500 MT of iodine so if we can make £10 / KG more profit we are at break even. How we make that £10 is the question, cost savings, higher profit for end products.

Just my musings

[odvod] 16/6/2015 13:10

All will depend also on the price setting in the long term contracts. How do they set a rolling chemicals price? Is there a formula (usually it is) and what would it be?

[crosseyed] 16/6/2015 13:07

Spike,

I don't know but would guess that the products would be manufactured in scheduled runs so that raw materials may be ordered using "just-in-time" principles. Certainly the end-of-year WIP and finished product inventory suggests quite short production cycles.

c

[odvod] 16/6/2015 13:07

crosseyed - can you confirm Mikes above conclusion? tia

[crosseyed] 16/6/2015 13:03

odvod,

I'm battling at the moment with those questions. The approach I described using compound break-down is based on weight, not revenues (apart from using the revenues to split the shipped weight total of 881 mT).

What has intrigued me is the iodine weight content in compounds of 428 mT. The total produced from IOsorb (328 mT) and re-cycled (est 60 mT) of 388 mT of which about 22 mT was sold as raw iodine, leaving 366 mT for IOChem products. That leaves a shortfall of 62 mT to make up the deduced manufacture of derivatives. Where did that come from? Inventory, presumably. We certainly saw a big drop in inventory (valuation) during the year.

c

[spike_1] 16/6/2015 12:58

One simple thing crosseyed's good work tells us, is that at a time of rising IoChem production, there will be a significant rise in cost of production (other chemicals), which won't show as additional income until the rising production has produced paid for sales.

Best wishes - Mike

[odvod] 16/6/2015 12:46

crosseyed - huge work on the price sensibility. To put it simple - what is the price sensibility (elasticity) in their chemical division regarding iodine prices - your estimate? To throw a number 1,2 etc eg. price of iodine goes up 20%, chemicals price goes up 40%

And a big thank you

[che7win] 16/6/2015 12:26

My, my.

Thought I would see what the noise was on the other board, glad I don't bother. Wasn't this the exact time we started rising strongly yesterday from 21.5p?

As I said, let the short sighted do their thing, in this case, selling right at the bottom it seems...
It even signed if off with a date...must be part of the Zak camp.

monkey....I hope no one listens to bears or bulls but engages their own brains and does their own research.

escapetohome 15 Jun'15 - 12:46 - 9306 of 9310 5 0

Every time the POOP boy tries to ramp it up , it falls, not so much even as a dead cat bounce.

...

Escapetohome 15 june 2015

[monkeymagic3] 16/6/2015 12:20

Superg1 - can't disagree with that, I'm just urging caution based on a very narrow timeframe.

Nobody (surely?) wants to go back to the bad old days of blind support which was partially responsible for the disproportionate rise and fall in the share price, well, I don't anyway.

Remember all the euphoria over the original management, then the "new" management (who quickly became the old management), then the support of the "new,new" management?

Che may enjoy looking only forward but I will also keep one eye on the past as, I believe, that is a realistic position to hold given that there was at least one constant through this whole debacle, Lance (to a greater or lesser extent).

If this is the turning point, great. Unlike others I am willing to wait and see if that is the case as only in time will it be proven. No need to nail colours to the mast at the moment but does seem that, at least, a corner may have been turned.

Last point, contrary to some of the rabid posters that have grown here it is, in my opinion, very EASY to constantly post positives to support a share you hold and conversely HARD to voice concerns/caution when it could be of short term detriment to your position.

[crosseyed] 16/6/2015 12:15

Post 33708 Iodine and Other products analysis from chemical compounds

[Edited to correct weight quantities applying to 2014]

Since Iofina issue a consolidated report which shows revenues in three categories (iodine derivatives, non-iodine products and direct sales of raw idoine), but not separately for IOResources and IOChem, and also shows cost-of-sales as a combined figure, does it make any difference whether they internally have accounting profit centres for IOResources and IOChem other than for internal management reporting to which we are not privy? The consolidated figures are the same. The extra revenues to IOResources with iodine transferred at "market" price rather than production cost of iodine then becomes an equal extra cost to IOChem.

I mentioned in an earlier post, and discussed with gadolinium here, a study to attempt to break down Iofina products into elemental weights derived from their chemical composition. I used the compounds listed on their website, weighted roughly by the proportions cited in the 2014 Mineral Commodity Summaries (link in the header). We also know the total shipped weight (1,942,000 lbs or 881 mT in 2014) from which I split out raw materials (est 22 mT) and the remainder into iodine-based derivatives (579 mT) and non-iodine products (280 mT) using the proportions of revenues cited for each category. I know there are some heroic assumptions there though I think they are reasonable.

Now, assuming that I have a close to full list of products, the chemical split into elements and their respective atomic weights is indisputable. However, the weightings are subjective. What is interesting is that the weight of elemental iodine required, excluding direct raw sales, amounts to 428 mT and all other chemicals amount to 431 mT, so close to equal. That's across all products (35 of them), both iodine-based (29) and non-iodine products (of which I indentifed six including notably lampricide). I have no idea about the processes to manufacture these compounds though the source chemicals required excluding iodine would certainly be of even greater weight with some waste. Thus, whilst we concentrate on iodine, a somewhat greater weight of other raw materials is actually required, some of which are not cheap.

For comparison, I did the same analysis assuming equal weighting for all compounds. This decreased the iodine weight ratio from 1:1 to 0.8:1. That of course is an unlikely scenario but it demonstrates that the result is not overly sensitive to the weightings. The corresponding composition was 380 mT of iodine and 479 mT of other chemicals.

I have also looked at previous years from 2011 to 2014. The results were remarkably consistent except for 2012 when there was a much lower proportion of non-iodine products with a commensurate increase in the overall iodine ratio, not surprising since iodine has a high relative atomic weight.

c

[monts12] 16/6/2015 12:14

superg1 16 Jun'15 - 11:39 - 33703 of 33705
Now at some locations they are producing it at under $15 per kg. Some Chile producers are and have been producing at 2 to 3 times that cost.

Can you show me where you get that figure from please SG1?

[che7win] 16/6/2015 12:13

That chart looks like it's heading right back to the 32p level.

[che7win] 16/6/2015 12:12

superg,
if true, then that bodes well - we truly would be lowest cost producer and some in the industry might see us as an easy way to increase iodine production (especially the Japanese).

For the cost, we have a competitive route to ramp up iodine production and a unique advantage compared to Chile - no mining/exploration costs.

[superg1] 16/6/2015 11:45

Wo0ly

I mentioned mutterings earlier and it turned out they were right. Along with those was an estimate of opex based on such production.

Monty said $26 for for 32 mt per month, I had been curious about his source. Start under 20 for the current rate. I'm sure someone will ask at the AGM.

I had a scalar of $25 (32 mt) to under 20 but they seem to have gone beyond that on production.

[superg1] 16/6/2015 11:39

MM3 re

'and still a long way (time wise) from the December 2013 RNS'

I'm still waiting for FUM's worldwide condom launch due in 2006 (as are you), there is still hope, I have 2022 pencilled in as that is around patent expiry time. :-)

GDL's early 2013 test well update, not difficult that one but still no news.

It seems to be the way of the AIM.

It doesn't seem long ago that IOF had to pay $65 per kg for it and then honour old prices for those with contracts.

Funds and well known city investors couldn't get enough of these on the climb and that's nowt to do with a bunch of PIs sharing views

Now at some locations they are producing it at under $15 per kg. Some Chile producers are and have been producing at 2 to 3 times that cost.

Producing iodine is difficult, and they have cracked it with new methods which are far cheaper than others, but as you say they need to keep it up.

They just hit that 50 mt per month trigger. Imo they should now sort another io2 type location to cement that level, and move on from there.

[woolybanana] 16/6/2015 11:12

Would IOF now be profitable based on the production figures released today?

[che7win] 16/6/2015 10:55

cyber,
yes, 100% correct.

There is a lag - up to 9 months in some cases but derivatives prices are influenced by the underlying raw prices and some of our customers are acutely aware of this.

[cyberbub] 16/6/2015 10:51

In effect what I am saying is that the buyers of processed iodine derivatives (from IOchem or our competitors) would expect that a rise in the raw iodine price would increase the sale price of the derivatives. (albeit a 50% increase in the raw iodine price might only cause a 10-20% increase in the sale price of the derivatives). And they would pay that price rise because they need the products.So in effect Iofina CAN gain from iodine market price rises even if it is 'selling' all its produced iodine internally, because IOchem would effectively gather in the rise by increasing the sale price of its derivatives.Yes?

[cyberbub] 16/6/2015 10:45

MM3, your post 33694... in truth once IO1 is relocated, we might be approaching the bottom end of that 700-1000mt range the company stated!Yes it will be impossible to reach the 1000mt level without new plants, but even at 650mt say, *if* the iodine price starts rising strongly later this year, we will start to see an increasing profit leverage effect IMO...One point I have not been clear about. Posters have been saying that we can't take advantage of the market price for iodine as most/all of our output is currently going to IOchem. Is this right though? AFAIR the production division is selling iodine to IOchem at the market price though... because that's the price IOchem would have to pay to get raw iodine anyway... IOchem then adds further value.I appreciate that 'market price' is in this case purely an internal transfer of funds within the wider company. But surely that means that actually any market price rise WILL lead to an increase in our profits from raw iodine sales, even if we sell it all internally to IOchem??I see this 'internal sales at market price' process as imposing a valuable discipline in the company's economics.Thx for any light on this. I am probably being thick!