Iofina Share Discussion Threads

[writz] 23/6/2013 09:00

Anyone got a line to Warren Buffett...?!

[writz] 23/6/2013 08:58

To SCRUTABLE's point, in the BOD's shoes I think I'd take the head honcho of each II for a quiet lunch and explain just how much profit they stand to make by keeping the company independent.

[jointer13] 23/6/2013 08:44

hxxp://share-knowledge.org.uk/2013/06/23/is-iofina-vulnerable/


Is Iofina Vulnerable?

June 23, 2013 Simon Featured Companies, Growth Shares, 0

Last week was a funny old week for Iofina shareholders. It began with news that L&G had been reducing their stake below the notifiable holdings level (it would seem the new fund manager has been selling off several holdings), anticipation grew on Tuesday that the AGM would shrug this off with good newsflow and then on Wednesday, while many shareholders were attending the AGM, the company delivered a less than inspiring pre-AGM announcement. Despite a series of positive and enlightening reports from shareholders who attended the AGM, the market wobbles on Thursday and Friday (especially for resource stocks) saw the share price end the week below 190p when I think it would be fair to say, most shareholders were hoping it would have been closer to 250p.

So what is going on at Iofina?

It is unfortunate that the resignation of Lance Baller as CEO on health grounds has left the company without a full time CEO. Such uncertainty is never a good thing for a company or its shareholders. We also heard that IO2 was only averaging 700kg of iodine production per month during the second quarter due to brine supplies and extreme weather conditions in Oklahoma during the quarter. Coupled with news that IO3 and IO4 would be commissioned somewhat later than expected, the share price reaction did not reflect that of a company that was on the brink of "changing the iodine industry forever" which was an earlier quote from the outgoing CEO.

The market heard 'delays' and 'uncertainty' but contrast that with reports coming from attendees at the AGM and a different picture emerges:

- A new, consistent brine supply to IO2 was possibly only be days away.

- IO3 would be located in Oklahoma and connected to a network of brine supplies with very high iodine concentration and when fully operational, could be producing up to 700mt of iodine per annum.

- IO4 would also be located in Oklahoma and is planned to be commissioned only 30 days after IO3.

- The revised water permit in Montana was half way through the approval process and provisional acceptance is expected within the next 45 days.

- A key patent for IOF's IOsorb technology is expected to be granted anytime.

- The company no longer has a need to buy iodine on the open market and can now supply its chemical division from internal production.

- IO5 and IO6 are planned before the end of the year with a further 6-8 iodine plants in 2014.

- A series of mobile IOsorb plants are planned to exploit brine supplies that have very high iodine concentration but low brine volumes.

One wonders why some of this wasn't more clearly presented in the AGM statement. There is a growing school of thought among shareholders that the company is trying to remain under the radar so as not to alert the competition or potential predators. If true, I wonder if this strategy is now becoming counterproductive.

It is unlikely that the iodine industry remains unaware of Iofina or the potential of its (now proven) technology for extracting iodine at very low operating costs compared to traditional methods. And the rapid roll out of iodine extraction plants throughout 2013/14 has already been placed in the public domain following the $15m bond issue. It would be naïve I think to suggest that potential predators were not already taking a very close look at Iofina and weighing up the cost of a bid.

Given the current share price, are Iofina vulnerable to a takeover approach?

My assessment of the situation is that they are. A bid at say, a 50% premium to the current share price would be very good business for several major players in the sector. Whether such a bid would succeed depends on the reaction by the board and shareholders where opinion is likely to be divided. Institutional investors are notoriously fickle in such situations and it is difficult for private investors to act in a unified manner.

The time is fast approaching where Iofina need to stop down playing their prospects and start updating the market with a clearer picture of their game changing potential. As we are approaching the end of the first half of the year, tangible production figures for H1 and realistic projections for H2 would be a good place to start.

It is time to start removing the cloak of secrecy that has been necessary up until now so that if a bid were to come, the starting point would be a realistic valuation. The keys to the iodine kingdom should not be sold at a discount and it is time for Iofina to go on the offensive.

[naphar] 23/6/2013 08:39

Gad, I specifically asked Lance at the AGM about royalties being included in the opex figures and he said they would usually be included, but did qualify that it depends what opex figures they are talking about.

From that discussion, I am working on the basis that they are included in the $10-$15, somewhat hard to believe as it is.

[the librarian] 23/6/2013 08:28

The non-core land leases have always annoyed me... waste of money unless you do something with them, playing the long game on those only eats away at your investment.

Tell Weil that you have land next to their helium find, negotiate and move on. Tell True oil that you have leases next to their (maybe) conventional oil find, negotiate and move on ..... I could go on, but won't bore you :-)

[gadolinium] 23/6/2013 08:19

I don't know either Lib, as I said I am making an assumption in the absence of any other information. Looking at my notes, it says the $10 excludes the royalty payment as well, so that's another unknown.

[jointer13] 23/6/2013 08:13

lib

"Just to add that they have made themselves a sitting duck with playing it down so much, we will see where it goes from here"

this is just what we did not want..its time that iof get really positive.
no cheap takeovers!!!!

[the librarian] 23/6/2013 08:07

I really don't know on that one gad, I'm guessing that the opex covers both, not at the moment though, because they have the crystalization towers at the IO's. As matrixtrader said in the past, better to work on $15 opex when up to speed.

[gadolinium] 23/6/2013 07:49

Hello Engelo,
Sorry if that left you confused. As already indicated prilling just changes the physical form to a more easily handled material, raising the purity to 99.5% plus would require additional crystallization. But, obviously these additional steps would add to the opex. (I am presuming $10 is opex for the crude stuff). I don't know what price the crude stuff would command, but presumably Jeff thought there was a market if for it.

[the librarian] 23/6/2013 07:38

Just to add that they have made themselves a sitting duck with playing it down so much, we will see where it goes from here!

[the librarian] 23/6/2013 07:31

I don't like the talk of takeovers, but having had time to think about it I can see why the BOD expect that at some point.

Having been given a nudge to look by superg, I can see why it is a distinct possibility at some point in the future. Having myself worked for companies in the past that have been a target and taken over, it's a simple exercise to them of stripping the company down, selling off various aspects/assets and keeping the bits that they want.

i.e. sell off the land leases, keeping Atlantis as a separate entity, pair that up with the water depot applications/outtakes and off that can go for a start, perhaps IOF have that intention (not the land leases) who knows?

At the current price, with the RNS's focussing on the negatives, it's a perfect storm in that respect. Are there people who could buy the lot and not blink an eye..... lots of them.

Under the radar? All of the adverts for new employees in Alva and all distinctly for Iodine plants, of course the opposition know, it would be unwise to think otherwise.

[bobsworth] 23/6/2013 07:19

Scruttable

Thanks. I enjoyed reading your post. Stopped rubbing my eyes and now rubbing my hands.

[crazycoops] 23/6/2013 07:10

A few other thoughts for you Scruts:

- Mobile IOsorb units
- IO3 producing as much as 700mt
- The Water Division
- The Oil assets
- The Helium assets
- IOC adding value to the raw price of iodine and growing at an exponential rate

The upside is phenomenal, that's why most of us are invested here.

BUT BUT BUT

If I owned 9 million shares and a) had health issues or b) drew a fairly modest salary, would I want to wait for the full value to out or would I want to cash in my chips on the way up? After all, there is only so much money one person needs in order to live a life of luxury and provide a comfortable inheritance for one's dependents.

Either way, I agree, IOF need to start shouting what they've got from the rooftops.

[the librarian] 23/6/2013 07:09

And the old and forgetful malachey, hard to get across to others that the search box is a wonderful tool... not you though :)

Pictures of the difference here : hxxp://www.alibaba.com/showroom/iodine.html

Try to get a quote for 100 tonnes :-)

[scrutable] 23/6/2013 06:08

In the absence of a sensible update of the company's guidance which it owes to its shareholders

WE SHOULD SHOUT THE FACTS FROM THE ROOFTOPS

and all of us should go viral immediately. In particular the company - or Chris from Hargreaves and Hale and or JMFinn or Stena should inform their fellow institution L&G so that they do not unknowingly sell the family silver,their remaining 1+m shares, as Gordon Brown so famously did with tons of the Bank of England's gold at $200/oz.


FACTS ON THE ROLL OUT AND MARGINS

We know from the Chairman Dr Chris Fay himself in his presentation of 30 minutes (? or so) at the AGM, remarks from CEO Lance Baller on the same occasion and at other times and from SG's 'digging' that IOF plans to deliver IO#6 by the end of Dec and 8 more plants by end 2014. We also know that 13 of these will generate a MINIMUM 300mT/pa, many possibly up to 450mT, and at least one of these 500-800mT. The evidence is there in the 1000kg/day production level recently reached by the second, larger, pilot plant IO#2. This should be RNSed immediately

The exit rate by end 2014 is therefore likely to reflect commissioning of up to IO#12 with IOI#13/14 possibly counted in as constructed but not actually producing next year.

Up to IO#12 then, I make that a minimum of 3,500mT/pa with anything up to 5.000+mT being possible from verbal guidance already given

We also know from the Chairman at the AGM that this will sell for $57-63/kg with opex at $8-12/kg to net $45-$55/kg ie £27-32/kg as raw iodine and £33-41/kg if processed and sold to derivative level but that with current capacity limits only the first 800mT as derivatives.



SALES MARGIN SUMMARY - FACTS

for 3500t/PA AT END 2014 THAT POINTS TO A MINIMUM PROFIT MARGIN EXIT RATE of £89m and MAXIMUM of £119M.

anything beyond 300mT/pa per plant ie from a total 3500 mT/pa up to a utopian 5000mT could yield £127m - £170m.

and that is ONLY THE VALUE RELEASED BY THE FIRST 14 OF 200 PLANTS



CONJECTURE
What does that make the company worth?

Allowing for full tax charges (30% ?) AND pe of x20 that possibly equates to a realistic capitalisation of £1.78 billion= £14/share, with anything up to +50% higher according to production upside above 300mT. With the forecast rate of roll out, extraordinary production growth , ultra high margins and phenominal profit I believe that the PE would be much higher

So what is this company worth when considering production beyond 14 plants and up to the 200 possible from existing contracts for iodine in brine supply?

Would it not be foolish to consider selling out at that stage with TEN TIMES MORE PROFIT AHEAD and £140 share beckoning given the continuity of current stable iodine prices in an increasingly tight world demand/supply situation.

Since normal people simply would not find this credible or possible, note that the share price of ASOS is today x2000 times ie an astronomical 200,000% its launch price.
Would you think, with hindsight, that you should have sold Apple ,Microsoft, or Google shares for $10. Tha'ts the nature of what you have in hand with IOF. Don't belittle it because you're scared

Rub your eyes and look closely again: from 14p to 180p ,five years later, IOF has seen its share price move higher in 40% of the time taken by ASOS

These are, as I and sg have intimated for six months are such incredible figures that one did not previously dare put them to paper. But Dr Fay and Lance Baller have now let us view the cat inside the bag. It's time to let it out..

as the infamous netly famously pointed out you cannot be forced to sell your shares as long as 25+% don't want to

In famous words as well from the Sage of Omaha, Warren Buffet "the stockmarket is an efficient device for transferring money from the impatient to the patient".

Finally if you did fall for the temptation of cash now with a premium, as Jeff Ploen seemed to be open to, where on earth could you put the proceeds to return half as much as you can gain as far as the eyes can see by sitting absolutely tight.

[malachey] 23/6/2013 04:29

Rugrat2's description of prilling from the old thread:


RUGRAT2 - 12 May 2013 - 13:59:20 - 24888 of 26092

Just a quick comment re the mention of prilling towers before I go out. It is nothing to do with the % quality of the product, rather the production of a more or less spherical,even sized and smooth coated product which flows easily and more consistently than a crystalline or granulated product. Commonly used in the fertiliser industry for the production of ammonium nitrate prills to enable it to be spun out of fertiliser spreaders with little variation in spread pattern across up to 40 metres spreading width. The liquid form of the chemical is dropped from height through an airstream which cools it to a solid form and gives it the spherical shape by the time it reaches the bottom - a bit like making lead shot.



With further explanation from Gad:

gadolinium - 13 May 2013 - 11:11:27 - 24970 of 26092

Just a quick post to add to Rugrats execellent description of the prilling process and to clarify the difference between prilling and crystallisation. Crystallisation is a method for purifying substances which exploits differences in solubility between hot and cold solution. The substance to be purified is dissolved in the minimal volume of hot solution of an appropriate solvent. On cooling the solution becomes supersaturated in the main component which then crystallises out, while the minor components or impurities (which are not supersaturated because they are present in lower concentration than the main component) are held back in solution, leading to the crystallised material having higher purity than the starting material. The product from such a process is isolated in crystalline form (as the name suggests), in the case of iodine usually as shiny black/blue needles (depending on solvent). Such crystalline material may have poor flow qualities for some required applications hence the need to prill the material to form a freer flowing globular form. The prilling process does to not lead to any further chemical purification, it is just a physical change in the form of the material.

Hope you don't mind guys. I think it is useful to salvage good clean info from the old thread and bump it back up for the new and the forgetful :-)

malachey.

[n3tleylucas] 23/6/2013 01:51

Rule 26 breaches;

9. EXCHANGE/TRADING PLATFORMS

The securities of Iofina are traded on the AIM market operated by the London Stock Exchange plc.

Its shares have not been admitted, nor have any applications been made, for any of its shares to be admitted or traded on any other exchanges or trading platform.
------------------------------------------------------------

Wrong! The stock is traded on the US OTC PINK market.

==============================================

10. FINANCIAL REPORTS

All published annual reports and interim reports can be accessed here
---------------------------------------------------------------------

Wrong! The 2012 Interim Report is missing

==================================

NL - Get the small things right.

[engelo] 23/6/2013 01:27

gadolinium (3050):

Your post (quoting Jeff) left me a bit confused. Surely the existing plants can produce both Mud and also high purity (chrystalline?) iodine from the plant towers?

This would tie in with plans for the product of the mini iosorbs (presumably Mud) being transported to I02 etc for further processing?

Also IOF Chem must be using using both Mud (eg for methyl iodide where it works better) and the pure product (for most other derivatives).

Prilling I believe is effectively pelletising, ie changing the shape and not increasing the purity of the iodine.

You know this stuff much better than I do so would appreciate clarification :-)

tia engelo

[bogg1e] 23/6/2013 00:55

fresh cheers

[hitsha3] 22/6/2013 23:17

it is important we keep cool.

[hitsha3] 22/6/2013 23:08

is any boady gonig any where, No i don't thinks so we all here to stay, thank to SG AND rest of good guys who post here.

[freshvoice] 22/6/2013 23:06

Bogg1e

Don't give too much away to the watchers!

Prill can be double price of mud but depends what purity mud you are talking about.

Production and consumption are broadly balanced so IOF will disturb that balance if they get to 1,800 mt. Either prices drop and some high cost producers go out of business or price stays up and IOF make a killing.

[bogg1e] 22/6/2013 22:48

whats the price difference between iodine sold as prill and iodine sold as extracted iodine mud? Tia

[bogg1e] 22/6/2013 22:35

SG1, regarding a few things you mentioned re a takeover and some digging you have been doing. Firstly you mention that IOFs competitors wont be able to compete with IOF. This may be true but i also thought that there was greater demand for iodine globally than can be supplied? So i dont see how iof could put another iodine supplier out of business, unless they can produce so much that production exceeds global demand (31,000 mt???) and thereby drive the price down.

Secondly, you mentioned that you were looking through oil related info, then you mentioned that someone you have been in correspondence with someone who has iof on their radar. Going on the loose order of the narrative, would the possible suitor be a large American onshore O&G, perchance??? If so, how much spare cash have they got? :-)