Iofina Share Discussion Threads

[superg1] 24/6/2015 13:26

Didn't someone post about an off-take agreement near completion. I thought I read it in posts somewhere.

I recall someone mentioned off-take agreements are preferred to a JV on iodine. I took that to mean such options have also been in play.

I wouldn't want a JV with the low iodine price, it is a false price on borrowed time.

End users have the levers at the moment, but when it turns the boot will very quickly shift to the other foot.

The negotiations game falls off a cliff when shortages are in play.

Those ends users have contracts to meet too all the way down the supply chain, If they can't see what is coming then best of luck to them. Personally I'd be slyly stocking up on iodine now, before the trouble hits.

[che7win] 24/6/2015 13:16

Spike, Yes, I think you have hit the nail on the head, that's the exact situation and I'm quite happy to hold whilst things develop.

[spike_1] 24/6/2015 12:33

It is clear from the AGM that they want to expand and have plans in place, but right now IMO they need a catalyst. Possibly any of the following:
Water with a substantial upfront payment
Rising iodine price or significant Chilean supply issues
Off-take agreement for a reasonable quantity

All of which could happen at any point!

Best wishes - Mike

[cyberbub] 24/6/2015 12:16

Here's hoping to see some 'twitching' in the iodine price in the coming weeks... I think there is every chance of it being over $35 by the autumn... that would be a huge boost to our bottom line...I must say I am still a bit mystified why the company can't at least clearly state a firm intention to roll out further plants in 2016... it's just been AGM comments etc. I am all in favour of underpromise/overdeliver, but there needs to be at least some moderate medium-term ambition put forward IMO...Onwards and hopefully upwards...GLA

[serratia] 24/6/2015 11:00

Not sure of the exact location but another big company getting hit in Chile.

[superg1] 24/6/2015 09:54

It looks like the SQM issue covers potassium too re payments.

It's all very complicated.

I love the way they go on about agreements as far back as 1993. That's when Ponce Lerou was in his prime fraud mode having been in charge of CORFO prior to that.

As one report said

'Julio Ponce had to give up the Corfo and disappear from the public scene after the scandal caused by the circulation of a pamphlet accusing him of illegally enriching himself.'


SQM have just claimed they have dome nothing wrong and have paid royalties in full.

I have it in my head that somewhere it says SQM offered $17 or $19 mill to settle the dispute. I'll see if that comment is out there.

[rhwillcoll] 24/6/2015 09:48

SG1: no it's not a fish and chip shop, it's a "battery" hen unit.

[awolagain] 24/6/2015 09:38

hxxp://www.dakotafinancialnews.com/sociedad-quimica-y-minera-de-chile-downgraded-by-zacks-to-strong-sell-sqm/218336/

[superg1] 24/6/2015 09:04

SQM news out yesterday and I need to digest it re CORFO. In one line it thought it was a lie compared to previous comments, so I'll have to work backwards on that to check.

On a quick read they have 'admitted' they sell 86% of the lithium to subsidiaries who then sell it on. That lowers royalty rates payable.

They come up with some reason about getting close to end users that way.

My first thought is, who are the subsidiaries. EG do they have a fish and chip shop as a subsidiary selling lithium etc

[superg1] 24/6/2015 08:47

I've been hovering around investing long enough now to know investor behaviours.

If sqm rights are suspended or any other major event, once the market gets wind of it, out comes the cash to trade and they gear like mad.

Gearing on IOF seems to offer about 4 fold across the board up to certain levels.

So right now £10k via that method could get 160,000 shares.

At the peak, geared it got 16000 shares.

SQM water rights suspended would mean that $60 to $100 per kg figure for iodine in a flash.

Hence if I spot such news, don't expect it to appear here instantly.

So that provokes the question of why not build io7 just in case?

Why bother with 600mt rates that's $18 mill extra at $60 per kg.

Research wise.

I said Sirocco were talking BS and their ALP would fail. I said their supply suspension reason was a lie and it was. I said they would go bust and they have.
I emailed them directly pointing out their lies, they didn't respond. Simon Jackson did one then resigned.

I said SQM were a bunch of lying crooks and showed why. Contesse lied in the last conference call and I showed a main analyst why, and it was right.

SQM inferred they produced more in 2014 than they did in 2013. I assume the analyst challenged them post event when he learned of the true figures.

The main iodine sector in Chile is built on Theft, fraud, lies, and bribery. All that has happened recently is that someone has got a grip of it and is taking action.

It's going to take a practically impossible turn-around to stop an inevitable severe iodine supply issue.

SQM know that and they will try to cash in. However they have a severe issue of their own looming over them at their main mine.

Sit tight, keep a close eye on Chile, and DYOR.

[the fat controller] 24/6/2015 08:32

Did anyone ask the Board whether we could become a billion dollar company, as they suggested twoAgm's about? It was discussed in advance, but I don't know if it was asked.
Tia TFC

[spideyyy] 24/6/2015 08:11

Hi.i liked the comment Lance made at the AGM "every 1USD rise in the price of iodine is a 100pct profit to them..it goes straight to the bottom line"

[spike_1] 24/6/2015 08:04

RB are already dead, but they still have some people on the payroll who are waiting to be fired any day now according to Lance, IOF have spoken to people who are employed at RB.

Some RB customers have also been talking to IOF about getting supply.

As for the price going up any day now, they didn't say that, but they say the current price is un-sustainable and do expect it to rise from here.

Best wishes - Mike

[monty panesar] 24/6/2015 07:49

Spike. Thanks for the feedback from the AGM re. Iodine price. So really they think the price might start to move up any day.

I thought RB Energy were already dead?

[superg1] 24/6/2015 07:34

Bocker

re

'we are led to believe that production costs on IO1 resited will be well below USD20'

Did anyone ask at the AGM re current opex on recent production. I think you will find it's below that rate.

Re the move of io1, think about the circs.

$1.5 mill eating into cash to get it in place. Employ more staff to cover it, purchase chemicals fro production, produce iodine pay for shipping, they get the first cheque 3 months after delivery.

You guys have come up with about 350 mt of iodine use at the chem div. IOF have built an inventory. Going on current production rates and comments about optimising then that's 250 to 350 mt spare.

That excess they intend to sell and have mentioned near term off-take agreements, going for multiple smaller deals to up the average price.

Why take a gamble on io7, iodine piling up burning cash, H2 tends to be the slow down period as Chile is in it's winter period.

If however the price moves up then that means SQM have adjusted their strategy or there is a supply problem.

A price hike is coming, when exactly we can only guess.

Using that $20 opex and the 200mt (io7) at $30 per kg that would be $2 mill profit. A $3 rise in the iodine price has the same result, with the current plan with no outlay.

SQM are in a terrible mess in recent times. Their strategy has been clear.

For me it's now a case of how long they intend hold the price down. They will be under pressure to raise the price, but they also want to finish off Cosayach.

Imo they don't need to squeeze the price any more, Cosayach are losing cash and the fraud case in play over the next few months should highlight the end.

They haven't paid a penny of those court orders.

RB supply end should start to kick in any time now.

$40 to $50 per kg should be the norm without any problems in Chile going forward. Any one of the many issues kicking in and the iodine price should fly

IOF call $33/34 per kg 'plain sailing'.

Most in Chile have costs higher than that.

[arlington chetwynd talbot] 24/6/2015 01:43

Freshvoicem,

If you are still holding this now there doesn't appear to be anymore obvious bad news imminent that will shock the market. Mind you, even with all we know the stock doesn't appear unduly cheap. In a sense there's still a tad too much noise for what's basically a small producer of a fairly minor raw material struggling to cover costs. If the debt-term gets extended you have breathing space to try and grow organically over the coming years. I'm unconvinced this is the right management and strategy though, but at the very least this one doesn't look too expensive.

[che7win] 23/6/2015 22:46

Bocker,
I think our thought process is quite similar, thank you.

I know when they were looking at external sales a year or so ago, it was taking a lot longer than they thought - I did look up old notes post AGM, there were a few working on those initial sales last year.
Iodine sales have long lead times, there isn't an iodine exchange unlike other commodities to actively trade raw iodine so I can understand their caution. Lance had also been involved back then, it took effort and I think they made a 12 Mt sale at that time.

So your points are valid and I can recognise that from here on they are making external sales which will tie up cash in inventory and additionally 60 days after that before payment. A new dimension to the business.

One thing for sure, this business is being carefully navigated to better times and we can take comfort that the pain points of the last two years are largely behind us now.

[bocker01] 23/6/2015 22:27

Tend always to agree with your posts Che. Always logical, positive but dispassionate. As we are led to believe that production costs on IO1 resited will be well below USD20 per kilo against a selling price currently of circa USB30, then the go slow is not about waiting for the price to go up. I prefer to see everything stabilised but they must be there by now and cannot need another six months. I suspect that IO1 may happen faster but after past balls ups on every plant implemented they may finally have got round to thinking that they cannot be late on a date never provided. Would add that if there is a genuine go slow, then it may also be to do with waiting to see if they can sell the excess iodine they are now accumulating in the necessary volumes before tying up more cash on resiting a plant which simply grows the stock pile. With external sales they now got to walk the walk rather than talk it.

[germanicus] 23/6/2015 21:27

Did the "ping" get a mention?

[woodpeckers] 23/6/2015 21:02

Absolutely Spike, just a waiting game now, they are cleverly biding their time.

[woodpeckers] 23/6/2015 20:44

che - "The killer at the AGM was a rule out of any plants during 2015 and indeed a reduction of the existing number.
That takes away adding a 'growth' factor in the share price .for the next few months."

In fairness I think we got our sweetener before the AGM. We were probably all concerned that they were not going to meet half yearly targets. They were not only able to confirm that they were going to do that, but told us that they will beat them. In the next week or two we should have confirmation by how much.

The AGM isn't, as far as I am aware about blowing us away with new news so I wasn't expecting any. The thing i did pick up on from the great reports back from others who attended is that they appear to be playing an "underestimate, outperform" game at last which is great news.

[bogg1e] 23/6/2015 20:26

Cool thanks Spike.

[spike_1] 23/6/2015 20:04

Boog1e, it's months (?) behind because it is the price agreed prior to contract, prior to actual export.

Best wishes - Mike

[kaos3] 23/6/2015 19:56

Is there a financial paper instrument related to iodine? If not that is very good. I could not find one.