Iofina Share Discussion Threads

[naphar] 19/6/2015 21:18

Ok, time for a reality check here, because there are either some chinese whispers, different interpretations, rose tinted glasses, or people hearing/reading what they want to.

That said my interpretation may be wrong, but at least its on the conservative side.

When talking of a new plant on a reasonable site, it was stated an IO7 should be expected to produce about 200mt.

When talking about optimisation, it was said we should expect further optimisation equating to a plant output. I don't recall IOF saying which plant, or mentioning 200mt in that regard.

When someone in audience was summarising the strategy (IIRC), 200mt in optmisation was mentioned and Tom, i think it was, corrected that audience member to say 100mt from optimisation was a more reasonable expectation.


So SG, I would modify your statement above to say 100mt in optimisation is a realistically achievable number, with a further 200mt annualised output expected to come online some time in 2016 from a moved IO1.

Lance also stated a theoretical plated output of 450mt should not be an expectation.

[superg1] 19/6/2015 20:13

Couldn't make it. Four letter word issue.............. GOLF :-).

Hmmm now everyone mentions water commissioners. Go back to my old posts, I said I'd never heard of them before the decision, but did after.

I now some major points posted here, some may not realise what they have said or digested it properly.

EG the 200mt left in optimisation of current plants, then the mention of that as being worth 1/2 an added plant.

Do the maths. They have some lucrative sites.

Ansana, great work I see they kept you busy.

I'll pick out all the bits later and add some things in, that will include bits I have been keeping quiet about until the week was over.

Btw

Ping putter, free to a good home.

[woodpeckers] 19/6/2015 19:22

Yes, possible production per plant looking great. Makes sense for them to concentrate on this rather than expand if this is the case.

Many thanks to our AGM reporters.

[monty panesar] 19/6/2015 19:17

Thanks for all the feedback. I had understood that the 5 plants would have a max capacity of around 600t/year.Now they seem to be indicating capacity of maybe 750t/annum if I am reading the comments correctly.As and when they move IO1 then the 6 plants should produce close to 1000t per annum. Is this the right interpretation?
This is now highly geared to the iodine price however if the price spikes due th issues in Chile we will probably be unaware of the price rise as the only way I know of tracking the price is through the Indian imports which are about 2 months in arrears.

[kaos3] 19/6/2015 19:13

Naphar - great point about water. Even if we get the water permit bureaucrats will take every opportunity for revenge. Seen it many times

[1madmarky] 19/6/2015 17:58

Thanks naphar ;-)

[naphar] 19/6/2015 17:50

I think I posted my thoughts on why such a bad H2 result when the results were announced. I suspected much of it was due to inventory value write downs.

Today we heard that was correct. High cost produced inventory from H1 had to be written down to end of year realisable value. That would have been quite a chunk of money, bearing in mind high H1 production costs.

For H1 2015, we therefore, Imo, need to focus not on profit but on cash generation. Why? Because end 2014 inventory was valued at realisable value, so will be sold in 2015 H1 at near to inventory value, meaning low/no profit on last years closing inventory.

What we produce this year will start filtering through in H1 accounts and will be more visible in H2 accounts. (Imo)

Of course, when looking at cash flow, we also have to bear in mind that we are increasing inventory to create an inventory reserve, to satisfy large buyers we are a serious credible supplier. That will be reflected as an asset on balance sheet, but we will not be selling that stockpile, this not realising cash from its sale. That will impact cash generation short term. But, it does mean we will be able to get those supply agreements at variable (so hopefully improving) prices, which will be a benefit. We now have the level of safety stock we need exiting H1.

[naphar] 19/6/2015 17:41

I feel the need to correct MadMarky's staff turnover post. It was bad, because oilies were paying $90k plus vehicle for staff. No longer are and people valuing solid stable jobs, so retention better.

[naphar] 19/6/2015 17:39

On the water, they are in discussion with the water commissioner. No one else at the dnrc was aware of the decision before publication/finalisation. They were not consulted apparently. And they were also surprised.

It is more likely than not, that the judicial review process will be started, ie application made for it to happen during the 30 day period.

They are, it seems waiting for some feedback from water commissioner, had hoped to have it by today but it had not come through yet. It may not come in next 2 weeks.

My thoughts.... Focus on iodine. If we get good news near term on water, great. But even if we do, it will take 12-18 months for the depot to be built and become operational.

There is also some uncertainty on what potential JV partners will think about the level of risk, given the decision so far. Even with a permit granted, that unforeseen could have some impact to timelines.

I will post more over weekend if I can, but no time this year for extensive notes as in past, sorry

[jbe81] 19/6/2015 17:23

Re the water permit.

from the interview Iofina have 30 days from the decision to go to a judicial review and intend to do so. The fact that they are waiting, a suggestion that they expect the decision to be overturned within those 30 days?

[hew] 19/6/2015 17:18

Awol, I have put forward an initial multipart question regarding the failed automation. Even if it proves possible to access details to any useful degree, it will take some time I suspect!

[1madmarky] 19/6/2015 15:50

Someone raised the spectar of SQM being nationalised fearing that it would cause iodine priced to drop. Number one what do we know about nationalised companies in the UK. Number two Lance mentioned that the iodine industry in Chile was previously nationalised..... It did not work very well, so it would actually be a good thing.

[1madmarky] 19/6/2015 14:51

They do need to retain good staff at the plants. Staff turnover is very bad. So that will require very detailed training and support for new staff.

Think this is another reason to stick with fixed units as they already have the procedures in place etc. Stick with what you know!

[che7win] 19/6/2015 14:50

Boggle, I also agree with you on the growth, why are they not moving io1 until next year and utilise the existing parts of that plant?Surely the costs there would be manageable? Saying there is 36 months payback but then stopping growth doesn't add up to me.

[1madmarky] 19/6/2015 14:47

Che - it goes some way but no figures :-(

[che7win] 19/6/2015 14:47

Thanks Mad.Boggle, agree, seems mostly one-offs then.

[awolagain] 19/6/2015 14:43

Hew

A couple of things....and I have a viral infection so not 100%.

If you stand back and look at what they as a company do....it is ground breaking for that industry....great.
Then when you look a little closer it is a bit of a mess...my feelings are that we are missing some key people....who can be consultants or short term contracts but as you point out the automated process can't be a complete failure...unless there is a major design flaw...they have stated they are still tweaking the plants...after all this time they are still not running properly....etc etc....so back to my first point 'key people'...where are they and who are they...who designed the plants etc etc...if we paid good money for these and in the blue print they should have been or had the ability to be automated I would be knocking doors!

[bogg1e] 19/6/2015 14:38

Che, as a key cost stated was adding more staff and the staff costs are stated in the accounts and therefore predictable, I would assume the other costs quoted are one offs or resolved by the changes made by management.

Shame about growth plans. It also leads one to assume that the technology isn't doing what we thought it would. I get the impression that Lance expects increases in production to come from improvements in the engineering and chemistry rather than increased brine. That tells me that even if lance had got his way by putting plants on his preferred sites, we may not have seen the high levels of production estimated to come from them (200 tpy+)due to unforeseen technical issues. Im a bit perplexed, cos I thought the science was sorted out. Extraction rates are quoted as high, the tech should produce 1 tpd by IO2 standards, so I thought the only impediment to achieving 70-80 tonnes per month was due to lack of brine and not the tech. Any thoughts welcome.

[1madmarky] 19/6/2015 14:37

From my poorly written notes
Water ;
Appealing decision
12-18 months build time from permit award to money coming in
3rd party to pay all costs, more than one instead party
JV partner (they have one in mind) wants to do multiple sites

Mobile units - not this year

Moving IO1 higher priority but not expected before end Q1 2016 (my interpretation)

Existing plants good for the equivalent of half another plant as optimisation continues.

Plant pay back is 12-36 months depending on location, even at the current price of iodine.

New plant cost $2.5m.
Electrical tie in can cost up to $0.5 if the branch you are on needs to be upgraded all the way back to the main line.

Debt extension - not an issue


IOC
Physical expansion limited
Still not doing shifts

In Q1 all production went to IOC

Additional sites etc will only be committed to once a supply agreement is in place.
Will be looking for multiple small supply agreements as you get a better price.
They are close (whatever that means) to signing the first supply agreement.
Supply agreement pricing would not be fixed, as price expected to rise (no real indication as to a expected price, although they are having interest from ex-RB customers.

That's about it, positive but not going to set the world on fire just yet.

[che7win] 19/6/2015 14:16

Thanks Mad, So can we treat most of the increase above what we expected to be one-offs?

[1madmarky] 19/6/2015 14:12

One off costs in H2
Severance costs
Inventory write downs as the price of iodine went down

[rogerbridge] 19/6/2015 13:51

Thanks Ansana.