Iofina Share Discussion Threads

[awolagain] 22/6/2015 07:33

Good morning all...thank you to everyone who contributed information re the agm.

I have not see any mention of the long awaited strategic plan??
Anyone ask why none of the directors have bought any shares for what seems like years??


Thanks

[ansana] 21/6/2015 22:26

SG you wrote"Still to early too tell if the drnc will allow it to get to a judicial review or fast track it by overturning the HE."Have the DNRC ever overturned an HE decision before?Are the powers/process in place to do this?I shouldn't have asked this, I am fed up with the water too.

[bocker01] 21/6/2015 21:39

Naphar, I think all we can do is guess! I value your comments very greatly. One can conjecture that a high percentage of supply is tied up in long term deals and the "free float" which determines spot prices is very much less. In which case RB and their administrators will have caused a lot of damage. IMH0 it took so long for RB to off load their inventory because they had to tread carefully to realise the best they could

[naphar] 21/6/2015 21:26

Bobby
I would also prefer to get the water!!

Bocker
I never said they had or would reduce prices.... i said they could. (Edit: but they would be stupid to do so if they did not have the inventory to supply the resulting demand at that price level, because the main reason for them to drop price would be to gain market share)

Based on Lance comments, I think price has been forced down by supply and demand. Companies like RB dumping inventory will have been a big contributor to that. SQM may or may not have reduced prices to gain market share,their own reports seem to suggest that may have been the case.

When RB finally stop trading, supply will reduce a bit. But i dont think prices will rise much because of that, just a bit until equilibrium is reached again. Then the next supply reduction or demand increase needs to kick in for the next price hike. IOF need to carefully time output ramp up to not reduce prices through introduction of their supply.

All imho

[bocker01] 21/6/2015 21:22

Personally I think that time on the Finn Cap report is time well spent. It seriously under estimates production potential (eg seems to be omitting a plant) underestimates price/cost gearing and is certainly designed as a document to be beaten as were the first half profuction figures.

[bobbyshilling] 21/6/2015 21:11

naphar,

I have no doubts the company will survive, but I do think that income from water will help to make us a giant. I appreciate your input earlier, thank you.

[bocker01] 21/6/2015 21:02

Naphar, really? They take thousands of tons off the market and then charge less for the remainder? May be you at right but where is the evidence? Now I am long in this share but I prefer facts to conjecture.

[naphar] 21/6/2015 20:53

Bocker

Its easy for SQM to reduce the price.... they just charge less. So I am puzzled by your comments.

That said, I don't know if it is SQM driving down the price, as Lance had said there was extra supply in the market.

[bocker01] 21/6/2015 20:44

As I briefly read it, FinnCap are forecasting output based on 5 installed plants not six but their cash expenditure includes getting the sixth in place and working but no income from it. This is good for investors though strange, Somewhat bizarre actually if I read it right. I cannot understand all this continued talk on water. So far it has always done the opposite of what people are 99 percent sure of. Sick of hearing bout it, Plus there's no evidence whatsoever that any one is going to pay anything for water other than repeated heresay. So even if we get it may be worth diddly squat. There is also no evidence I've read that SQM have been driving the iodine price down, To drive the price down they need to increase supply whereas what's quoted on this thread is the exact opposite and their supply has fallen, price is set by supply and demand and that is a real fact. Apparently SQM have reduced supply not increased it. The evidence appears that supply still continues to reduce. Eventually therefore price will go up. RBS demise likely to accelerate this. But all this talk about SQM reducing price....where is the evidence.... How have they done this.... By taking thousands of tons off the market??? Evidence is they have problems agreed...

[naphar] 21/6/2015 20:43

Bobby

Water is key to a fast expansion of iodine but not key to survival imo.

They have been mentioning offtake agreements to fund plants for some time. I dont think it has been specifically driven by the refusal of the water permit.

On the water JV partners, they used the plural because they will have a partner for the plant installation and running and one for sales and marketing of the water.

They have not chosen partners yet, so they may have more than one option for each. I think they know who they would go with though if the permit were awarded quickly.

[kaos3] 21/6/2015 20:28

Why would water JV partner go with us and not apply himself?

[madchick] 21/6/2015 20:27

naphar - thanks, that cleared it up for me!

[monty panesar] 21/6/2015 20:19

If price recovers to $35-40 range I can see them being able to revert to the plan to build 4 new plants a year. Assuming a $35 price this time next year with IO7 in place so run rate is 900t pa. I calculate they would be able to fund one per quarter expansion from next summer onwards.
If water comes along all well and good but that is largely out of IOF's control so has to be written off for now.

[bobbyshilling] 21/6/2015 20:00

naphar 21 Jun'15 - 19:06 - 33983 of 33983 0

On the other hand, from comments at AGM, it seems offtake agreements are always at a fixed price for a period of time. We don't particularly want to lock into these low prices. The positive to an offtake agreement is, it could come with the funding to put the plant in place.


Exactly - that is why our (non-core!!) water permit is so important to progress.
There is even a choice, judging by the feedback, of whom we can JV with, and that means CASH to expand. Our non-core water permit is more vital to the company at the moment than any med-long term expansion through extra iodine units which will come 'as and when we have the money'. Sorry folks, but that is my probably unpopular view. We MUST get that permit, not only for now, but for future use of our very valuable Atlantis project. The money will be coming in for years from that and subsequent permits - doesn't matter what is happening to iodine prices.

[naphar] 21/6/2015 19:06

Mad
We have had external sales, of a one off variety, but not an external sales agreement (something ongoing), which if I understood right would not be at a fixed price.

On the other hand, from comments at AGM, it seems offtake agreements are always at a fixed price for a period of time. We don't particularly want to lock into these low prices. The positive to an offtake agreement is, it could come with the funding to put the plant in place.

Clearer?

[madchick] 21/6/2015 18:47

I'm getting confused - not long until an external sales agreement (we've had these before) or not long until an external offtake agreement (I understand an offtake agreement to be a regular thing and not a one-off)? I don't think the offtake agreements will be at a fixed price, I think they'll be at a percentage below market price. That would make more sense. IOF got caught before on a fixed low price, if I recall correctly, so I'm not sure they'd do that again.

tackems - anyone - I didn't understand the bit about current lenders reaction to the holding off on expansion. Did the lenders want IOF to push ahead or were they just happy with the strategy and simply said they'd be more than happy to continue to lend? I'm assuming the latter, given the "partners" comment.

[bogg1e] 21/6/2015 18:29

Naphar, I have 0.8 tonnes per day of iodine consumption at IOC or thereabouts so yeah 300 tonnes-ish.

[naphar] 21/6/2015 17:57

Hurricane

Thats what I thought, and I agree, not long til the first external iodine "sales agreement", a slightly more regular thing than the small one off sales they have been making so far.

If they had no strategic inventory at end of 2014, that means the H1 output of 280mt has been enough to satisfy internal iodine needs, make some external iodine sales, and build a strategic inventory of 100-140mt.

That says to me that internal iodine needs is much lower than i think a post above suggested. I suspect IOC is not using more than about 300-360mt pa currently from Iofina Resources

[hurricane.] 21/6/2015 17:50

Stategic inventory has been built.
Shouldn't be long for the first external iodine sales agreement imo

[naphar] 21/6/2015 17:24

On the strategic inventory and selling small lots question...

They need 100-140mt strategic inventory.
Q1 production was sufficient for internal IOC use. I may be wrong but recall them saying their strategic inventory is basically complete.

Can someone confirm?

They can sell small lots in excess of market price, because small lots are just more expensive, they do not attract the bulk buying discounts I guess, normal business. I think the high quality of IOF iodine is recognised and will help them gain custom, but not a higher price. Lower quality iodine will achieve a lower price (my assumption based on normal business logic)

Lastly, if/when we start getting large offtake/selling agreements, they will attract bulk buying discounts. In my opinion, the more smaller customers we have to take our iodine at above normal market prices, the better. The more selling agreements we get as opposed to long term offtake agreements the better in the short term. Why? Because an offtake agreement will attract a fixed price and locking in at these low prices makes little sense if you can sell all your current excess output in small batch higher price transaction and through larger volume sales agreements that whilst may be discounted, are not at fixed prices.

[bobbyshilling] 21/6/2015 16:34

Firstly, a big thank you to all who have given info after attending the AGM. It seems clear enough; there are potential JV partners in the wings regarding the water permit, should this come to fruition that should give the company a cash injection to expand more quickly. Otherwise, slowly, slowly. In any case 12-18 months before water revenue, after permit, longer than most expected I should think. However, potential chaos in the Montana Water dept. may still yet see us get it quickly, but I am pleased that they have indicated they will take up the challenge if they do not. Someone posted earlier that we can't even collect our own discharge water from Atlantis without a permit; could be a major reason as to why that project is also on hold.

Frankly, unless they can overturn the water permit decision, I am disappointed. Any decent growth here is dependant upon iodine price or water. Having said that, it could all come to fruition and there could be the perfect storm for IOF in 2 years time. zzzzzzzzzzzz.

[woodpeckers] 21/6/2015 16:30

Many thanks for sharing tackems.

Did they say why they have sold "small quantities" of iodine in to the market if they are trying to build up inventory? Good to hear that they were able to do so "above market prices" though, this suggests the quality is good. Were they doing this to simply test the market for the quality they are able to produce?

[bogg1e] 21/6/2015 16:19

tackems, marvellous stuff. Its really helped to "round out" the feedback as a whole. much clearer picture emerging. Big thanks as well to Naphar etc.

[rogerbridge] 21/6/2015 16:09

The other operations are more important than iodine and I take your point they may not be hurting on the iodine front alone. But why sell product at low margin when you may need the cash.