Iofina Share Discussion Threads

[1madmarky] 22/6/2015 15:58

I. Recall 80 to 140mt being mentioned as a requirement before being able to sign sales contracts. I believe Lance said they were almost there...
Make of it what you will

[crosseyed] 22/6/2015 15:37

naphar,

Sorry for misrepresenting you :[ But I hope my comments were otherwise appropriate.

By the way, do you recall where the 300-360 mT pa of iodine figure for IOChem processing derives?

Also was the figure of 100-140 mT of idoine inventory having actually been achieved sourced from the AGM?

Thanks,
c

[woodpeckers] 22/6/2015 15:33

From FinnCap's report:

Forecasts and valuation

We are forecasting 552 tonnes of iodine production in FY2015E, of which
we expect 328 tonnes to be consumed by Speciality Chemical, with the
balancing 224 tonnes used to build some inventory and ultimately sell in
the open market.

[naphar] 22/6/2015 15:29

Cross, I was referring to other peoples comments and not your post at all.
You may be right with your comments above,I find it very difficult to judge and reconcile without more detail, all credit to you for trying.

All I know is, with 280+mt being produced in H1, on top of their opening inventory, less what was used in H1 production, has allowed them to build the necesssary 100-140mt strategic inventory required to start achieving good levels of external sales.

Given that, I expect them to be in a position to potentially achieve external sales in the region of 100mt in H2, as they no longer need to build an inventory.

[crosseyed] 22/6/2015 15:14

naphar,
re:"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." (post 33980)

Bogg1e,
re: "I have 0.8 tonnes per day of iodine consumption at IOC or thereabouts so yeah 300 tonnes-ish." (post 33981)

In my post 33708 (presumably referred to by naphar), I presented the results of an analysis using the website-published list of compounds, both those derived from iodine and the remainder with no (resulting) iodine content. I have slightly revised the numbers in that post since I inadvertently posted the conclusions re the breakdown of iodine and other chemicals for 2013, not 2014 - all other figures remain unchanged. That analysis indicated a shipped weight amounting to 428 mT of iodine and 431 mT of other elements as well as a further 22 mT (est) of raw iodine, giving 881 mT of total shipped products (1,942,000 lbs). The 2014 Report shows 327 mT of IOsorb-produced iodine and possibly a further 60 mT (est) of re-cycled iodine. That's a shortfall of 62 mT which I assume must have come from inventory which was very high at the start of 2013 and much reduced by year-end.

Before properly embarking on this analysis, I asked gadolinium, in an earlier post on this BB, to comment on the chemical breakdown using the relative atomic masses of the elements in a specific product from its chemical formula. Apart from an arithmetic error which I acknowledged and corrected, I understood his response to indicate that the approach was sound. Having developed the analysis for all known products, with appropriate weightings derived from the 2014 USGS report pertaining to iodine (link in the header), I then used the stated shipped weight (less shipments of raw iodine) apportioned into iodine-based and non-iodine products using the respective revenues for each to split the total shipped into those two categories. I believe that the chemical analysis into constituent elements is sound.

The soundness of this approach might be queried:

a) The total shipped quantity might include packaging. If so, I would say that the inclusion of such a statistic as a key indicator would be deceitful. If I buy 1kg of salt, I don't expect that 1kg to include the packaging. Most products are shipped in bulk, usually to wholesalers. I cannot imagine that they would accept anything other than the bulk weight of the product thay are purchasing. I discount that objection.

b) The weightings I apply to each product, and to the separate categories of shipped iodine-based and non-iodine products may be wildly inaccurate. That is indeed possible but how far out can it be given the total shipped quantity? I ran the analysis through with equal weighting applied to all products. It gave a breakdown of 380 mT of iodine and 479 mT of other chemicals making up total shipped products, with a further 22 mT of raw iodine, of 881 mT. I think that to be unlikely. The top 8 weighted iodine-based products (out of 29) account for 75% of the attributed weight of 579 mT of iodine-based products, and 300 mT of the 430 mT of elemental iodine, all products identified in the USGS report.

So that is somewhat at odds with the 300-360 mT of iodine processed by IOChem as quoted in your posts. Actually, I had also been using that range as the annual manufacturing limit expressed in terms of source iodine but I have found the figure to conflict somewhat with increasing quantities of shipped iodine. It's about right for 2012 when the analysis suggest 341 mT of source iodine; less at 289 mT of iodine in 2013; but completely at odds with the 428 mT (+22 mT of raw iodine) in 2014. So is that figure simply based on what happened in 2012 rather than a hard limit? I would ask for verification and explanation, if you would be so kind. Perhaps a substantial amount of overtime was worked during 2014, for which there might be some supporting evidence in the signifcantly increased unit wages bill.

How does that tie in with production during H1 2015?
At least 280 mT is indicated from IOsorb plants though I'm expecting 290 mT as are one or two other posters here. Assuming re-cycled iodine at the past assumed average rate of 5 mT/month, that would take the total to 310-320 mT. Assuming no increase in overall IOChem production, that would require 214 mT leaving 96-106 mT of iodine, not counting any existing inventory of iodine at the start of 2015. So that would probably achieve the strategic inventory reserve that seems to be required. I wonder what average monthly quantity of raw iodine IOF hopes to sell.

c

[woodpeckers] 22/6/2015 14:09

Many thanks Bogg1e.

[bogg1e] 22/6/2015 13:42

hxxp://finncapresearch.mediasterling.com/pdf/STK_10843.pdf

[woodpeckers] 22/6/2015 13:17

Does anyone have a link to the FinnCap report please?

[freshvoicem] 22/6/2015 12:28

Could help if someone can provide better translation than Google
theclinic.cl

[freshvoicem] 22/6/2015 12:22

Looks as though Union could help SQM, getting worried about unemployment of members.


The workers' union SQM Salar , filed on Friday an injunction against Corfo, whose legal representative is the Executive Vice President, Eduardo Bitrán- after learning the rejection of the Board of the State to a proposed settlement with the company, under the arbitration proceedings with the tax authority seeks to advance the end of the mining concessions in the Salar de Atacama.

The agreement, proposed by the arbitration court of Arbitration and Mediation Center of the Santiago Chamber of Commerce (CCS), Hector Humeres, was to pay $ 17 million and modification of lease that kept since 1993. But the state Board rejected on 11 June.

The appeal notes that Corfo exposes the source of work "that may run out of cash support overnight" if the government maintains its position of rejecting the settlement and continue the procedure until the issuance of the arbitration award.

Union President SQM Salar, Claudio Castillo, told The Clinic Online that the measure is part of an offensive of workers who will be affected by this decision, totaling more than 3,500 directly and 3,000 related to the transportation and distribution workers .

"What we are doing is slowing Corfo's economy if the contracts are finalized. Unemployment will be increased and have a gloomy outlook because our workers would be directly affected by something that does not correspond "he says.

Keep the contract

The appeal was filed on Friday after last week became public rejection of Corfo to the output given by the arbitration judge, by the Board of the State, which is made by the Minister of Economy, Luis Felipe Céspedes; Executive Vice President, Eduardo Bitran; Ministers and Rodrigo Valdes (Finance); Heraldo Muñoz (Foreign Affairs), Marcos Barraza (Social Development); and Carlos Furche (Agriculture), plus a representative of the Presidency role that the entrepreneur Rafael Guilisasti.

The appeal referred to the violation of constitutional rights under Article 19 No. 16 and No. 22 of the Constitution, which speak of the right to freedom of work and protection from arbitrary and discriminatory treatment that should give the State and its agencies in economic matters.

Thus the action sought to be "re-establish the rule of law, providing that the respondent keep the current contract in effect between the two institutions, retaining all the provisions contained in the above-mentioned contract, as well as its benefits."

The text adds that in order to avoid serious damages, injunction is ordered to Corfo manara can not unilaterally apply for early termination of the lease with SQM Salar by 28 054 hectares of property tax for the exploitation of potassium, lithium and other substances that may be exploited in the Salar, which has a term of validity until 31 December 2030.

According to Castillo, the measure will come hand in hand with other actions and it is possible that workers radicalizen their actions with roadblocks and international steps being necessary. "Nobody is worried about the situation of workers, which have nothing to do with the controversies of the directors of the company", says the leader.

It recalls that a week ago Corfo rejected a possible agreement, on the application that initiated the state's May 16, 2014, when the term of the lease, the payment of compensation of income was asked to perceive until 31 December 2030, payment for moral damages of 30% of the material damage to be determined in arbitration proceedings and the restoration of mining properties.

This contract allows the company to Ponce Lerou to exploit resources in a total of 81,920 hectares until 31 December 2030. Nothing less for the privatized company to dictatorship, since operations in the Salar de Atacama reported him almost 40% of total revenues for signature. In 2014, SEM had revenues of 2.014 million dollars.

Here the remedy for protection filed by the Union of SQM

[superg1] 22/6/2015 12:19

Meb


Rb

2010, 2011 and 2012 RB sold everything they produced

2012 they produced/sold 1,220 tonnes.

2013 H1 produced 750mt sold 476mt.

At that point they stopped supplying the market to build an inventory for reasons which turned out to be a lie. As you can see they then had 274 mt of inventory, their highest ever.

No supplying in H2, RB T/O so figures don't appear. but they claim an 800mt inventory by the year end.

2014

Q1 Produced 211 sold 126. The figures exclude January due to the T/O, they never revealed them.

Q2 Produced 314 sold 518 mt.

Q3 Produced 218 sold 367 mt.

So you can see in Q1 to Q3 2014 they sold 258mt more than they produced.

Then manure hit the fan and they haven't given figures since. My estimate was that they should have about 400mt left in the inventory by the year end. That is about 3 months worth of supply.

So they supplied over 1000 mt in Q1 to 3 having supplied 476mt in 2013.

Hence my comments about a false market re production.


Cosayach.

April 13 to May 14 they stole water and the best details I have suggest they added 2000mt to the pot during that time on top of their 1,800mt production.

So you can see both Cosayach and RB created a false over-supply situation at the same time. Cosayach wells were closed in May 2014 but the inventory built up would go into the markets for many months after that.

SQM

Late 2013 they close their expensive El Toco/ Maria Elena mine. It was closed before but they opened it during the iodine price spike.

So SQM real production is down in 2014 by 1600/1700 mt compared to 2012 and 2013.

They turned the Iris plant back on in August 2014.

I still haven't yet worked out how they produced 6000mt from NV having processed 17% less Caliche. It should have meant a 1000mt drop in iodine production.

I suspect they have fiddled the figures somehow to hide an iodine production, double-counted, or plain made a mistake with the caliche mined figure.

Metric tons of ore mined 2014 to 2012

19,792 iodine produced 6000t

23,515 6100

23,937 6000

Iodine (ppm) 467 462 465

[bogg1e] 22/6/2015 12:05

Oh I see, thanks Spike.

[spike_1] 22/6/2015 12:03

Boogle - Kaos means the AGM. I think most people are waiting for Greece to settle (might just be sorted by late tonight).

Best wishes - Mike

[bogg1e] 22/6/2015 10:55

Kaos, what meeting please? Water commissioner? Hedge funds? Thanks.

[superg1] 22/6/2015 10:50

Taking on all the comments post AGM re production.

I read 100mt left in optimisation for existing plants and 200mt for a moved io1.

Going on 50mt per month which seems to be the case now and $20 opex the below opex seems to kick in.

+100mt optimisation then $20 becomes $17.14.

+200 on a new plant and $17.14 becomes $16 per kg.

I have imo started that at a price higher than current opex at current production rates.

There will be a big difference from what is produced at io2 compared to io3 and 5.

If io3 or 5 was on 100mt, then dumping that one of those (with io1 moved) would mean 800mt at $15 per kg.

Move that plant to a 200 site and $15 becomes $14.50.

I believe the new sites will do more than 200mt if they are like io2. They have wisely left some over-perform options just as they did with the 220 to 260 H1 forecast.

Any time that the iodine market gets tight and prices start to rise then I see them actioning expansion.

It won't take a lot for them to get into the $10 to $15 range. No rush, no need to gamble, let the iodine market sort itself out, they can react quickly to any changes and potentially get premium prices.

[kaos3] 22/6/2015 10:02

Expected more volume after the meeting.

Many many thaks to all contributors.

[superg1] 22/6/2015 08:53

On this line.

'Plus there's no evidence whatsoever that any one is going to pay anything for water other than repeated hearsay'

The hearsay is IOF stating they have 2 very interested parties willing to pay millions for a depot.

I suspect that isn't a plan to make such an investment, and leave it standing idle.

re

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??


Perhaps you haven't read the posts or SQM reports.

The SQM closed mine has costs too high for this price. It only opened again in 2011 due to the high prices. It closed once the price went below $45 per kg.

They have stripped back production to their lowest cost areas.

RB had built up an inventory.

Cosayach had done the same by water theft.

Both had and have serious cash issues.

So SQM stripped back their costs and took the price down.

Think about it, Cosayach would have cashed in on iodine produced with water stolen from SQM.

How can a company that produces 26% of the market demand claim pricing pressures by others. If SQM put the price up $5 tomorrow and end users were not prepared to pay that, where would they get 9000mt of iodine?.

As recently mentioned. It was $38 per kg last year on average. A drop to $30 cost SQM $70 mill of profits. Reducing the price to regain their 30% market share gives then an extra $10 mill profit.

So the end result for their efforts is a $60 mill pa loss in profits.

It is very obvious that SQM are doing it solely to put Cosayach out of business, they have been trying for 15 years.

SQM, not me, have Cosayach on $33 per kg opex. so they are forcing them to sell the stolen iodine at a loss. SQM know the Cosayach group have $270 mill to pay and potentially up to $600 mill depending on what fine is imposed.

Cosayach are screwed, it's just a matter of time.

BUT under the current circs how long can SQM play this private battle as pressures from other directions will bite at some point.

If the water rights get suspended then there is going to be one hell of a mess in the iodine production/supply market for some time.

re

'The evidence appears that supply still continues to reduce'

Supply has gone up as quoted by SQM, they said 31,600mt in 2014 and expect a further demand rise of 1,600mt this year.

The iodine availability has come from inventories. Demand has risen and production has fallen.

From IOF comments RB's 1600 mt supply last year, which is not available now, is starting to get phones ringing.

IOF know the full history of the current iodine situation. It takes time for events to hit the supply side, but when it does, end users stock up and create a supply shortage.

[rhwillcoll] 22/6/2015 08:48

superg1: I don't think for one moment that we currently have "equilibrium" in iodine supply and demand, nor that that is the reason for the depressed iodine price. At the AGM the company (perhaps wisely) mentioned "equilibrium" and that they estimate a $2 per tonne price increase once RB Energy are gone. I think the company is being very cautious/conservative, in order to dampen down over-enthusiasm of PIs, and that is very understandable given disappointments in delivery over the past two years. However, fundamentally I totally agree with your assessment re SQM deliberately manipulating prices and that the iodine price will go up much more than envisaged and stated, once the "turn" or "trigger" does come. Meanwhile, just content to wait for that as "events" unfold in Chile, and to see IOF's decent and consistent iodine production, which is on a rising trend.

[bocker01] 22/6/2015 08:38

In that case SG, apologies, I accept the correction. The issue then, I suppose, is how long they will continue to keep prices down. As they must be barely breaking even on iodine if that and because of all their other problems, I do not imagine it will be sustainable in anything but the short term whatever happens with Cosayech.

[superg1] 22/6/2015 08:18

Before someone asks.

The SQM CEO said this (it's not the only comment they made which shows what they are up to).

'As we have mentioned in recent quarters, the lower revenues in this business line are the result of lower prices. We are working to recapture our market share, and market prices have reflected these efforts.'

[superg1] 22/6/2015 07:55

Bocker

The whole point on here is to provide info with evidence backing it up.

re

'There is also no evidence I've read that SQM have been driving the iodine price down'

It's been spoon-fed on here detailing exactly where such info is. Your above comment is incorrect, SQM actually stated that was part of their strategy to get back some market share.

[hurricane.] 22/6/2015 07:51

Thank you to all that passed on Fridays AGM details.
the company has and is making large strides forward in iodine production and sales. share price won't be trading below 30p for long imo

[superg1] 22/6/2015 07:50

Oasis like slick water. results comments days ago.

The test included seven wells in a portion of a single drilling space unit (DSU), all completed with slickwater completions. Nusz added that the Middle Bakken well has produced approximately 256,000 boe through 216 days and the wells in the first bench of the Three Forks have produced on average 167,000 boe through 192 days. Oasis also completed its first high-volume proppant test in Alger.

“The Helling Trust has two new Middle Bakken wells that have produced on average 139,000 boe through 88 days and a well completed in the first bench of the Three Forks wells that has produced 104,000 boe through 87 days. All of the Middle Bakken and Three Forks wells in both the White Unit and the Helling Trust have early time production that is trending over double our corresponding production data for our 750,000 boe Middle Bakken type curve and our 600,000 boe Three Forks type curve, respectively,” Nusz said. “The continued outperformance of both of these high intensity completion tests continues to provide us with confidence in our plans to target our core area with high-intensity completions.”