Iofina Share Discussion Threads

[superg1] 18/6/2015 07:31

Bogg1e
To save your calculator just go for roughly an equal split across the 3 months re the forecast. Assuming June goes as well as the previous 2 months then they will jog past 280.

Meetings have already taken place with some info already around.

Fresh

Your questions. some have already been answered.

Did they chase volume and ignore ppm? Yes

Did they ignore. Fracking schedule? They didn't ask if there was one/failed to consider it.

Did they look for sites close together to reduce costs? That's always been a consideration.

Or near utilities? As we saw with io5 no, they didn't arrange for a power supply and ran it off a generator.

All sites generally requite the addition of a power supply $250k for each was mentioned. As I recall at thw last AGM they mentioned 2 future sites have been sorted re that. Would need to check re that.

IO4 they located in an area higher than the surrounding supply. Hence the gravity feed systems didn't send a lot there. That has been sorted with a booster pump.

Io6 has decent brine rates and ppm of you look at news. There has always been talk about redirecting higher ppm brine.

Io3 and 5 it seems are in areas of lower ppm, from all the news over time I'd say io3 is the poor relation and if there is to be another plant moved in the future then I'd pick on io3, but imo that wouldn't happen until another plant is in. An io2 type plant.

Re one or two under $15. The range of production from best plants to the worst is significant but all make money at this price.

Now if folks knew the opex for the recent levels of production then one or two under $15 wouldn't be questioned. The best plant will be very low.

They have said they have some high ppm sites.

Ask at the AGM.

Personally I don't want them signing long term fixed price supply contracts right now, as the writing on the wall suggests the iodine price lows are on borrowed time. Spot prices for those not on contracts hit daft levels in the last crisis.

[arlington chetwynd talbot] 18/6/2015 00:15

kreature - Good morning mate. Looks fully valued even if 3p is met in '16 so there's not an obvious investment case for buying at these levels unless you really beleve 3p can be hit next year and then 5p in '17. Let's see if it can turn a profit of any kind this year. Some stocks always seem to be overvalued, sometimes for very good reason, but this one hasn't earned the right to be.
naphar - The strategy seems muddled as it avoids expanding IC. I think you must either integrate properly or sell direct, not both. The former needs capital so the latter is probably better at this stage for organic growth, make some money for once and put away the begging bowl.
aja5 - Alas and alack I am on the (much needed) wagon for a few months. The fact you cannot tell is either testament to my fortitude or you think everything I post is utter dross? You know I think there might be a growth story in here somewhere with the right strategy and management, not sure you've got either at the moment though.
Anyway it's nice to read a few contributions from the quieter ones, although let's not be getting carried away with the numbers game again... we know what happened last time! Set achievable and reasonable goals within the current framework and remember that growth is an important process that breeds confidence, no matter how low the initial earnings might be.

[naphar] 17/6/2015 23:10

Nice work cross.
It does indeed show the scaling potential very well indeed.
Add to that the scaling impact of a rise in iodine prices, and the future could look very rosy if management play this the right way.
Despite all the pain these past 2 years, I think we are now in a good place to take advantage. A long way to go though, with the iodine price outside our control.

[crosseyed] 17/6/2015 22:27

Re IOsorb unit production costs...

Here are some monthly cost metrics. You may query the amounts but the scaling is irrefutable. These are the metrics:

Production in mT/mth: 0.001*(Productivity 90%)*(Brine bbls/day)*(Concentration, ppm)*(Active days/mth) / 6290

Cost of labour (7 workers at $4782/mth): $33,474 (fixed)
Manufacturing overheads (electricity, services, etc): $74,000 (fixed)
Cost of chemicals and brine delivery: ($0.11 per bbl)*(Brine bbls/day)*(Active days/mth)
Cost of shipping: (Production mT/mth)*($0.30 per kg)
Revenue-sharing: (Production mT/mth)*($2.25 per kg)

Unit production cost ($/kg): (Total costs)/(Produced quantity)

In this model, the variables are brine quantity in bbls/day, concentration (ppm or parts per million), and active days per month. Here ars some progressive scenarios and the resultant unit costs ($/kg).

Id 1 2 3 4 5 6 7 8Brine (bbls/day) 10,000 10,000 10,000 20,000 20,000 20,000 22,000 12,500Concentration (ppm) 150 200 250 150 200 250 250 100Active days 20 20 20 20 20 20 25 15Production (mt/mth) 4.29 5.72 7.15 8.59 11.5 14.3 19.7 2.7Costs in $k: 140.4 144.1 147.7 173.4 180.7 188.0 218.1 134.9 Labour 33.5 33.5 33.5 33.5 33.5 33.5 33.5 33.5Manufacturing 74.0 74.0 74.0 74.0 74.0 74.0 74.0 74.0Chemicals and delivery 22.0 22.0 22.0 44.0 44.0 44.0 60.5 20.6Shipping 1.3 1.7 2.1 2.6 3.4 4.3 5.9 0.8Revenue-share 9.7 12.9 16.1 19.3 25.8 32.2 44.2 6.0Unit cost ($/kg) 32.7 23.1 20.7 20.2 15.8 13.1 11.1 50.3


The precise values are not important (though I would appreciate other opinions). The point is to demonstrate the marked effects on unit production costs.
- Labour and manufacturing costs are fixed, to all intents and purposes.
- Chemical and delivery costs depend on the quantity of brine to be processed.
- Shipping and Revenue-share are proportional to the quantity of produced iodine, itself also dependent on the concentration of iodine in the brine.

Columns 1-3 show the effects of increasing concentration with a low brine supply.
Columns 4-6 show the effects of the same increasing concentrations with a healthy brine supply.
Column 7 is an assessment of the current IO2 situation, probably the most productive of the IOsorb plants.
Column 8 is an assessment of the IO1 situation and demonstrates why it has been closed down.

I must stress that these are my own estimates. I think they illustrate, though, the rationale of the low unit cost figures that have been mentioned. There remains much scope for improvement.

IMHO, DYOR,

c

PS I shall be away from internet comms for a couple of days so cannot respond to queries until the weekend.

[naphar] 17/6/2015 22:14

Bogg1e
They announced an increase now,but its a step too far for me to say they must be doing 70mt in June.
Good question for the AGM.
If I were IOF, I wouldn't upgrade expectations until I was pretty sure the new figure was achievable.
I think 70 in June is highly unlikely and to give people expectations of that is just crazy.

As mm3 keeps saying, lets deal in facts as much as we can, so lets ask at AGM.

[bogg1e] 17/6/2015 22:07

Chaps, as ever thanks for the research. However you have missed an important point. Production for Q2 (April to end june) = 153 tonnes+ or 51 tonnes per month. However, at the end of may Iofina reiterated 220-260 tonnes for H1. Therefore I assume that at the end of may production was still at 40 tonnes per month (it could be 31-45 tonnes, but lets assume 40). Well that means 80 tonnes for april and may, which in turn means 70 TONNES FOR JUNE, ie this may be the first indicator that the brine disruption is coming to an end and the plants are now running closer to full capacity (we were told last year that brine disruption would end in H1 2015). It would be great if someone could ask about this at the AGM.

Secondly, mebs asked about profitability for 2015. Well on 480 tonnes production, at $30 per kilo and $20 costs, when one includes other costs such as admin charges, would lave Iofina at more or less break even for the year. I therefore think, no large unexpected costs withstanding, that we shall turn a modest profit for 2015, now that production is higher and costs lowered from $20 per kilo to about $16.

Lastly, regarding raw iodine sales to third parties. my understanding is from past releases, that Iofina are selling processed pure iodine and prilled. AFAIK sales of raw iodine mud is only expected to happen when production is much higher than now.

Any thoughts?

[freshvoicem] 17/6/2015 18:52

If I could get to AGM there are a few points I would like cleared up.

Are we saying that all of IO3 to IO6 were put in the wrong place by G&G? Or just 5 and 3?
I know it was said they ignored the plan but even they must have had a reason for changing location, even if it was flawed. For example
Did they chase volume and ignore ppm?
Did they ignore. Fracking schedule?
Did they look for sites close together to reduce costs?
Or near utilities?

It would be interesting to know which it was, why and whether any faults can be remedied in time without relocating.
What is the cost of relocating? Is it just ground works, or is some of plant not reusable?

[superg1] 17/6/2015 17:02

My order of merit re plants

io2
io6
io4
io5
io3

[superg1] 17/6/2015 17:01

Serratia

If they do that they won't believe what is says for io2. :-)

[roboben] 17/6/2015 16:42

There are plenty on here who have already done the calculations based on figures available.

DYOR guys!

Especially necessary if you don't trust other peoples'.

[serratia] 17/6/2015 16:33

Don't know why you guys are pushing that question. Run a spreadsheet and see what happens to costs when production rises to 50 tons/month and costs are largely fixed.

[zendo102] 17/6/2015 16:15

monts12 I'll repost in case you missed it:

superg1 16th June'15-11:39-33703-33705
"Now at some locations they are producing it at under $15 per kg"
Can you show me where you get that figure from please SG1?

Still waiting...

[superg1] 17/6/2015 16:06

Monts

Mutterings just like other bits.

[che7win] 17/6/2015 15:29

Agreed roundup, Cant be too many traders left banking their 15% gains. The MMs are accumulating, can't be too long before buyers emerge to push this back into 32p range.Probably buyers eod as tomorrow should be an up day from experience.

[clem fandango] 17/6/2015 14:35

monts12 I'll repost in case you missed it:

superg1 16th June'15-11:39-33703-33705
"Now at some locations they are producing it at under $15 per kg"
Can you show me where you get that figure from please SG1?

Still waiting...

[roundup] 17/6/2015 13:51

I see MM have been gathering stock all day on low volume. I have seen this before, and after sells dry up they will raise the bid and release the stock.

[superg1] 17/6/2015 13:29

Put another way it seems it's possible all Chile iodine isn't up to scratch for certain processes. What sector of the market that adds up to, I have no idea.

Only mutterings btw so another Q for someone to ask.

[superg1] 17/6/2015 13:19

Naphar spot on.

I thought the early goading was about how the heck were we going to sell the raw iodine.

IOF have said it many times and long ago. Raw sales would go to end users who don't compete re the chemical division derivatives.

Rh

Re

How does the quality of Iofina's iodine compare to that of Chile and to that of
Japan? If better quality, then would we obtain a premium for our raw iodine, over and above eg that imported.

Are you doing a Monte, there has been some favourable mutterings re that and perhaps it's something that may come out in presentations and the AGM. A recent 'event' or qualification I understand. Note some time back that IOF stated their production purity met levels for all their derivatives.

[naphar] 17/6/2015 09:37

I am sure I had read there was a broker note out,not sure who from though and not seen it anywhere

[spike_1] 17/6/2015 09:33

IOF are doing II Presentations as we speak, no doubt one of them will be the house broker, after which I would expect some sort of update, (possibly not until after the AGM?).

Best wishes - Mike

[awolagain] 17/6/2015 09:14

Thanks Nap...I was rather hoping we might have had more from the broker at this point and as they are new thought they might have a view!

[rogerbridge] 17/6/2015 09:10

We need news on a number of fronts over the coming months, but most of all, we need good numbers.

When the profits start to roll in the share price will move on up. If the iodine price rises, the numbers increase and so does sentiment.

Prospects here are good even after Tom's blip in the road.

[naphar] 17/6/2015 08:48

Awol
i can only think it means the corporate credit ratings

[awolagain] 17/6/2015 08:36

Can someone please explain this to me?

"...IOF have had their "Corporate" rating reaffirmed?

Thanks