Iofina Share Discussion Threads

[hew] 19/6/2015 09:51

QUESTION: Do they believe the recent Results gave a full and fair picture of 2014 operations? Including in relation to 2013

[ansana] 19/6/2015 09:51

Yes, AWOL just sent that. Any more questions Guys and Gals?

[hew] 19/6/2015 09:49

I would not anticipate Chilean Govt. action over SQM having much short term effect on iodine production beyond what adhering to "the rules", including environmental ones would mean. Indeed it could lead to an iodine price rise if anticompetitive behaviour was stopped. But no SQM won't mean no iodine, IMO.

[beercapafn] 19/6/2015 09:49

Question:

How many mobile units planed in for build in the next 12 months. ?

[awolagain] 19/6/2015 09:47

Ansana

Can you ask 'why have the directors not bought any shares'?

Thanks

Awol

[ansana] 19/6/2015 09:40

Just had a text from the AGM, not many there, anyone got any burning questions and I can forward then on, one or two may be asked.

[ansana] 19/6/2015 09:36

But if that were to happen surely there would be an upside to iodine prices as it played out and that's what we need to allow us to expand. The markets dislike uncertainty and SQM has a mighty big question mark hanging over them now. Yesterday was not a happy day for them.

[joeblogg2] 19/6/2015 09:32

SQM have deliberately sold at a low price to get other comapnies to go the wall. Thos would not be allowed over here as anti competitive

[awolagain] 19/6/2015 09:32

Hew

My thoughts also. It seems from the post from SG

"...in order to manage, plan and develop non-metallic mining in the area now leased to SQM..."

I find very worrying...anyone with thoughts?

[danwaits] 19/6/2015 09:30

Hew, if the Chilean government take charge, the amount produced would be contingent on environmental considerations and even if production was maintained at current levels, we should still see a rise in prices from the current low levels, as an orderly market is resumed.

[hew] 19/6/2015 09:20

Two posts not given the attention they deserve IMO:

SuperG: “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.”

Awolagain: “Are you suggesting the Government (state body) will investigate taking over SQM mines/land and start mining?? Nightmare as they could really drive the price down to get market share (not operating like a commercial co so profits not an issue)??”

Whatever the process that emerges, it would seem unlikely that the demise of SQM would mean the demise of Chilean iodine production.

[woolybanana] 19/6/2015 09:13

The one thing about Chile which we may be overlooking is that the Chilean government may decide that a bad company closely watched is better than going through the process and finding new and better ones. We must remember that their biggest need is tax revenues and this may, in the end, persuade them to make the best of a bad deal.

[freshvoicem] 19/6/2015 08:25

No che I disagree down more likely.

[che7win] 19/6/2015 08:14

MMs will push this on up today.

[superg1] 19/6/2015 07:40

If those water rights get suspended in Pozo Almonte Iodine prices will go nuts, if that I have no doubt.

Re the recent news there is plenty of reference about iodine affected. IO will look some more over the next day or so, but I don't believe they produce iodine form that area.

The only question I have is where did the extra 1000mt come from at NV. They processed 17% less caliche there last year v 2013 and 2012 but the iodine production rate was the same (6000mt).

Then further on they claimed a bit of expansion at NV yet their numbers don't support that.

They do recycle iodine waste steams at NV.

[che7win] 19/6/2015 07:06

ACT,
I wouldn't go by broker forecasts, they are rarely accurate for any stock.

They also tend to lag the market for individual stocks whose prospects have changed for the better (as with HWDN which I own) and vice versa.

What happens, for instance, if prospects change for the water application, or iodine price, or the growth in production?

We have already upgraded our existing plant production forecasts, much to the Bears disappointment, that along with any iodine price rise turbocharges our earnings.

No one - you, I, brokers, or the market can predict what happens with accuracy.

However, we can see evidence that the company is progressing well and iodine production should see growth over 50% this year on existing plants - we are currently surpassing that growth nearly half way through.
That, coupled with the halogen business growing 20-25% bodes very well.
You see, it doesn't need astonishing growth as you suggest!

I expect growth of Iodine production will continue with plants rolled out as I don't feel management believe we are at a critical mass right now, we are producing and selling at enough to more or less cover overheads (admin) and leave a bit left over for profits.

Add IO1 into a sweet spot and a couple of mobiles and forecasts may start to look very conservative as admin costs will be more or less fixed as plant numbers grow.

You quote the broker 3.26p Eps profit for next year. It's just a guess as we know, but if We start to indulge in its accuracy, then assuming we continue to grow at a sustainable 20% rate, the market will factor in that growth of earnings, so that puts the share price target at 65p for a P/E of 20 at conservative 20% growth. The growth should be much higher than that from a low base.

I think that growth of earnings will turn out much too conservative, the gearing effect here along with iodine prices rising and growth of production makes earnings prospects explosive.

Now, let's get back to your rule that you published about TUNG and you're using here.
See, you are in a bit of a dilemma, because of the stock you published your rule on...

Incidentally, you said TUNG was a good buy at 180p, turns out it wasn't. I said it was worth 80p over a year ago and it's now at 62p, though no one can predict small caps with accuracy.

IOF business model unlike TUNG has proven plants and quarter on quarter growth in an industry where iodine production is difficult and costly. We are moving to lowest costs and we are pushing into cash flow, our directions and prospects are firmly up and not reflected in the share price. So the comparison on prospects differs markedly.

However, on your rule - here is your dilemma - TUNG on revenue of £22m this year is predicted to lose over £30m!. Then next year on £54m it's predicted to lose £1m. Then only in three years time is it predicted to make profit on £19m. Of course, it's not predictable at all that TUNG will do this!
You are placing accuracy on broker forecasts though aren't you, otherwise you can't comment on IOF valuation wise?
Your rule doesn't work for the very stock you published it on, so why do you use it here?
Just what is your valuation on TUNG now?
Maybe you will tell me TUNG should be valued on three years out, or maybe it's got a predicatable business model (it doesn't), or maybe shareholders there see big earnings - I guess they must do but I don't.

Your rule doesn't work that well, come on, admit it.

No one can say how high iodine rises from here, but we can say that every $ iodine rises will flow straight to IOFs bottom line - massive gearing and it's coming our way*!

* some time soon? Who knows!

[arlington chetwynd talbot] 19/6/2015 00:18

che7win,

I do not feel I am being contradictory by looking at DL's 3p EPS in 2016 as it is 2 years out in reporting terms and so 30p would be about right for now if that were to be hit, which explains my fully valued comment to kreature. Of course you are right that as news flows that number, and subsequent numbers can be moved up or down accordingly. My point is that this doesn't look particularly cheap at the moment (which is what I was asked) unless an astonishing growth phase is about to happen which would appear somewhat unlikely given raw material prices, muddled strategy and questionable management. I am of course assuming the recent comments about financial targets being 'underpinned' by the recent update number relate at least in some part to house broker estimates.

There is an assumption that Chilean problems are good news. Only one poster today has questioned that narrative.

[spike_1] 19/6/2015 00:00

Anyone else going to the AGM see you there - Best wishes - Mike

[superg1] 18/6/2015 22:53

Roger

They are currently oblivious to RB bust (except those who bought from RB, in China and India), Cosayach woes, and SQM water rights threat, I have asked

Best served cold as they say.

One sniff of a supply issue and the end users stock up hoping to get cheap iodine but then create price hikes.

The whole world does it in every aspect. Prices rise they stock up, prices drop they keep the cupboard bare hoping for lower prices.

Harold Hamm got it right (they thought he was nuts), oil dip to 40 and some saying $10 possible, he said you can forget forward hedging on those prices, I'll take my chances.

[che7win] 18/6/2015 22:51

Any panic and buyers will find it hard to seek alternatives to SQM....nice that IOF has their own supply and availability to sell.

All getting very interesting, right on the cusp of the AGM.

[awolagain] 18/6/2015 22:49

Are you suggesting the Government (state body) will investigate taking over SQM mines/land and start mining?? Nightmare as they could really drive the price down to get market share (not operating like a commercial co so profits not an issue)??
Or I am a little delirious and have misunderstood you??

Good luck tomorrow

[rogerbridge] 18/6/2015 22:43

How long before iodine buyers begin to panic.

[superg1] 18/6/2015 22:40

Aha

SQM news in 2014

We continue to work through the arbitration process with CORFO related to the methodology used to calculate payments made by SQM to CORFO in relation to the lease agreement in the Salar de Atacama. CORFO estimates a difference in payments of close to US$9 million and our position is that we have made the appropriate payments.

here is the key line

'methodology used to calculate payments'

methodology lol. They sold below market prices to other companies in the group to reduce royalty liabilities, aka 'methodology'

[superg1] 18/6/2015 22:35

The iodine bit confuses me. It says

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.

As far as I know they don't produce iodine at the location, but the report states that's what SQM said.

I think the reporter has made a mistake. A small matter though as it covers 39% of their revenue and they have some large bonds and debts reliant on those leases.

I doubt it will end here.

What have we so far. Ponce Lerou and mates insider dealing and fraud, then up pops the current bribery case. While I knew the CORFO case was in play I had no idea about the tricks being played to avoid payments.

There will be more fraud to raise it's head I'm sure. Top to bottom the whole company was developed on fraud and hasn't stopped since.


Shame I didn't have time to talk to someone in the commodities industry today who wants to report on the water rights issues found. Will do tomorrow hopefully.

SQM need that issue like a hole in the head.

We did say when Bachelet got in it would be pay back time.

Everyone that knows Chile, Ponce Lerou and the rest of them thought they were untouchable and nothing would happen, that seemed the likely outcome, lift the carpet, sweep under. It seems that's not the case.

The new Chile government seem to have it in for SQM.