Iofina Share Discussion Threads

[superg1] 18/6/2015 22:22

Phew

It sounds nasty

According to government sources, "SQM is not a suitable company to have contracts with the State of Chile". Therefore, the corporation will propose the establishment of a committee Corfo in accordance with Article 7 of the DFL 211, in order to manage, plan and develop non-metallic mining in the area now leased to SQM.

Well at least my source was right the other day, SQM were shortly to face some very serious trouble.

[superg1] 18/6/2015 22:07

Just got back and I need to digest one bit in a news news report as I'm not sure it's right.

SQM has complied fully with the contract, and an arbitration process with the government agency will continue even if Corfo quits talks, the Santiago company said in a response to the securities regulator. The license to extract brine rich in iodine, lithium and potassium from the Atacama Salt Lake provides 39 percent of the company’s revenue, it said.

In the conference call Contesse the CEO was asked a direct question on that and he hesitated, Someone whispered in the background and then he said they were confident. all BS no doubt.

I note a judicial process is mentioned.

There are two key words that I have mentioned before, technical and material.

SQM claim the breach was technical under the lease rules so it couldn't be rescinded. CORFO claim it fell under a material breach and therefore can be rescinded. That's the argument.

However there is something new in the info which makes me side with CORFO.

'Corfo alleges SQM has underpaid on contracts and sold products to related companies at below-market prices'

I agree technical if you get your sums wrong and paid the wrong amount accidentally. Selling it to group companies at discount to avoid the royalty payments can never (in my opinion) amount to technical, it's called fraud.

If CORFO are right with what they say, those leases imo will be rescinded. So will Potash corp now abandon the good ship SQM.

Another thing springs to mind, did that sales process also allow then to avoid tax payments.

[aja5] 18/6/2015 22:02

SQM Adr's are down over 13%.....oh dear!

[rhwillcoll] 18/6/2015 21:13

Freshvoice: I think that shareholders in SQM may be feeling a little bit "Soquimich".

[hurricane.] 18/6/2015 20:51

with Chilean producers imploding its perfect timing for acquiring cheap IOF shares. I suspect the share price won't be under 33p for long

[freshvoicem] 18/6/2015 20:43

Another view from 'the clinic'paper
SQM
The Corporation of Promotion of Production (Corfo) rejected the proposed settlement with non-metallic miner SQM, and called for an end of the rental contract that kept both firms since 1993 and maturing in 2030. All this in the context of arbitration proceedings against the dictatorship and privatized company controlled by the former son of Pinochet, Julio Ponce Lerou.

According to El Mercurio said Corfo, the decision has serious consequences for Soquimich, since between 60 and 75% of what it sells depends on the mining products extracted from such leased area, among which boric acid, potassium, lithium, among others.

So, that means indicates that the session held on June 11, Corfo concluded that SQM fell into "grave breaches" in the contract that maintained, such as using transfer prices under market value at the time Related making sales in addition to over-exploit the water in the area and have a constant behavior not "ethical".

Well, at the hearing on 9 July in order contract will be required. El Mercurio said Soquimich declined to comment on an issue that is still ongoing, but the company said it has complied with the obligations of the contract

[pinkpudycat] 18/6/2015 20:40

I've had a peek at the Iodine pricing for June, it seems it is heading in the right direction.

[monty panesar] 18/6/2015 20:31

Pandemonium in the Chilean iodine industry. Perfect!

[che7win] 18/6/2015 17:26

rhwillcoll,
too right, who would trust a guarantee of supply of iodine from Chile right now...

Very good for us on multiple fronts!

Superg, another bit of detective work pays off...

[rhwillcoll] 18/6/2015 17:20

Any element of doubt re continuity of SQM should concentrate the minds of those
people thinking of taking an off-take iodine agreement with IOF ......

[che7win] 18/6/2015 17:08

The key paragraph:

"The license to extract brine rich in iodine, lithium and potassium from the Atacama Salt Lake provides 39 percent of the company’s revenue, it said."

I thought Corfo were threatening their lithium licence, not sure if this would engulf iodine production, maybe superg can give the definitive answer.

Corfo are the Chilean government organisation responsible for granting licences for mining - this is a very significant escalation in the risk to SQM.

This is GOOD for IOF, in fact I'm quite excited by it!

[tim3416] 18/6/2015 17:01

Duplicate post

[che7win] 18/6/2015 17:01

It's not about water I don't think, much more serious:

"SQM has complied fully with the contract, and an arbitration process with the government agency will continue even if Corfo quits talks, the Santiago company said in a response to the securities regulator. The license to extract brine rich in iodine, lithium and potassium from the Atacama Salt Lake provides 39 percent of the company’s revenue, it said."

[tim3416] 18/6/2015 16:59

Thanks Ansana

[ansana] 18/6/2015 16:55

Tim it's a threat to revoke the water, Bloomberg article released about 20mins ago. I can't cut and paste but have passed it on, can someone post please. Poor SQM.

[tim3416] 18/6/2015 16:11

Maybe they got a special presentation lol

[che7win] 18/6/2015 16:10

Tim,
I think some analysts saw our business plan.

:-)

[tim3416] 18/6/2015 16:04

SQM down over 10% this afternoon sg, is there any news out? I had a look but can't see any.

[superg1] 18/6/2015 15:22

Fresh

I think new folk get seen today. With the Greek debt issue I doubt any fund is buying anything on the AIM right now.

There is a chance we may get some sort of update re water judging by the odd rumbling, we'll have to wait and see, or those attending the AGM may get an idea re that tomorrow.

[freshvoicem] 18/6/2015 14:51

Meb
Big boys don't dash out of meeting and put buy orders in immediately.

[meb123] 18/6/2015 13:38

I assume they will have had a few investor presentations by now , but judging by the share price movement , the institutions need more convincing. Still hopefully we will get more answers from the AGM. Is there anyone who knows more on what has been said by them so far at these presentations ?

[che7win] 18/6/2015 08:17

ACT,
you contradict yourself.

You say 3p met this year and 5p 17.

And by your own admission, you value stocks two years out as you posted on TUNG thread..

So if we take that rough rule, we should be targeting IOF share price of anywhere between current price up to 100p, depending on our view of the company meeting growth.

We actually only need to make 1.5p and 50% growth to value the business at above current prices.
We can be pretty sure now that we can grow iodine production 50% on the 5 plants (actually more with the upgrade in production), so the current price is compelling.

So we do nothing above the current plants and iodine production grows 50%+.

You fail to put any valuation in world iodine prices, let alone even moving IO1 to a lucrative site.

We are 10p too cheap on what we know, this is a compelling price to buy at imho.

Forecasts change - just look at TUNG. At least we have a tangible business surpassing forecasts :-)

[naphar] 18/6/2015 08:03

Sg, agreed, fixed price contracts no thanks.
Variable price contracts, with a ceiling and floor of maybe 40-25 (around current india import prices and weighted to the upside with quarterly, half yearly or annual review of those bands, no issue for me.

The regular price could be set as a percentage above prior months india imports (given no real market price) reflecting higher quality of iof iodine.

Such a contract could really get us moving!

[1madmarky] 18/6/2015 07:42

The above suggests we are finally starting to achieve the potential that we all saw 2 years ago. Fingers crossed we can continue in the same vein. GLA