Iofina Share Discussion Threads

[n3tleylucas] 03/7/2013 12:43

I enjoy maca's posts. Keep it up mate, you'll get stick from some, don't worry.

[uppompeii] 03/7/2013 12:37

I should think he is just offering a useful alternative perspective. Quite reasonable after the past couple of weeks don't you think?

[the librarian] 03/7/2013 12:36

Good points to explore but it's getting boring and repetitive now, lots of patient replies there to be applauded.

[warmsun] 03/7/2013 12:20

Cheers Dig :)

[superg1] 03/7/2013 12:17

Engelo

It is going around in circles a bit and we have been answering the questions for weeks.

It doesn't look like IOF is for you Maca, so maybe time to look elsewhere to invest.

Sirocco have plenty of cash and expansion plans (public company). If you research into those as an investment into iodine, then good luck.

[superg1] 03/7/2013 12:08

Glad to see someone looked up Toyota's plans. they want to expand on iodine right through the chain of sectors that use it, gaining 15% of the market starting at the top end of the chain (production).

The Algorta move hasn't gone to plan. There interest in the US brine can't expand due to their tech.

However right in their backyard a company has appeared with vast contracts on brine, that can produce and at a fraction of the cost involved in their other ventures.

So what do they do next. Their chief engineer a while back was caught taking photo's of io2.

They have seen Arytsa come and go, yet IOF appear and suddenly don't need to buy raw iodine from others for the chem div.

SQM won't anyone getting hold of an iodine producer that can add significantly to the market at low capex and opex.

End users won't want a chem div getting hold of IOF.

The Troy corporation have been putting up their prices due to their cost of buying iodine. They simply couldn't compete if a major end user acquired IOF, (Dow springs to mind)

[engelo] 03/7/2013 12:06

maca (4560)

"I personally deprecate the value of 'made in america' particularly in this case as it would strictly have to read 'made in america by a british (financed) company' which post BP Deepwater Horizon might not be what it once was (if ever)."

Managing to turn the advantages to US users of obtaining iodine from a US source into a negative is sheer genius :-)

"...can only be validated by them doing what they say they will and hitting their targets, each potential failure to do so along the way represents a banana skin waiting to be slipped on.

On the other hand each one avoided is a step up and a missed opportunity to be on board, so it is a completely subjective and double sided debate."

Wise words, which apply equally to all other companies out there.

[warmsun] 03/7/2013 12:02

For those interested in L2 etc, the share price is not as 'bad' at the moment as it appears. Subject (as always) to icebergs, there are only 3 blocks of shares on the Offer at the moment (with a total of about 5800) before we get to 165 (which may be a stumbling block as there are roughly 32,500 shares sitting there).

Edit.
As I was typing L2 did improve...and apologies, I dont have the capabilities to post a snapshot....

[superg1] 03/7/2013 11:54

So to cut it short Maca

You don't see 100's of mills capex to get opex in the $30's and $40's as a negative compared to $10m capex and $10 opex to get beyond what many Chile mines can produce.

Iodine rich brines are rare in commercial terms. It's all to do with seaweed in prehistoric times.

The entire Bakken is not showing commercial iodine, I asked.

High oil and gas concentrations does not mean High iodine.

However Oklahoma is far different, it has been known for decades about small parts., but IOF just opened up the iodine map in a big way.
That is already apparent with the limited io2 data so far.

Iocehm are on 300 to 400 ppm. Taking the mid range of 350ppm. IOF plants on 30k bpd would produce 500mt.

$1.5m- $2m capex to get 500mt at $10-$15 opex

I suspect ppm is higher than 350 for those plants. We'll see as data of the new brines appears.

[testuser123] 03/7/2013 11:52

In terms of who the iodine belongs to once it's out of the ground it isn't anyone's guess. It's owned by iof because they have a separate contract with the landowners. That's why I say it's a barrier to entry.

[pcjoe] 03/7/2013 11:46

Lost me there Maca - SWD disposal is an unavoidable cost for o&g operators - disposal via Iof is money in the bank - the profit split is down to negotiation & the relative strength of each parties bargaining position

[maca1212] 03/7/2013 11:21

SmilingM,

Good points, although I personally deprecate the value of 'made in america' particularly in this case as it would strictly have to read 'made in america by a british (financed) company' which post BP Deepwater Horizon might not be what it once was (if ever).

For me it does not matter if their tech is pedestrian, the business model and quality of execution are the things that will differentiate them as an investment.

As (IMO) those are considerably more complex than has been guided, and can only be validated by them doing what they say they will and hitting their targets, each potential failure to do so along the way represents a banana skin waiting to be slipped on.

On the other hand each one avoided is a step up and a missed opportunity to be on board, so it is a completely subjective and double sided debate.

I am sure the coin will fall (or the banana slip - or not) both ways a few times before we are through (if ever we are).

M

pcjoe, - while I see the contract thing as a barrer to entry of a competitor I do not see it as some sort of warrant that guarantees execution - access to the brine relies on someone else spending $3.0M per well to bring it up. In terms of who it might belong to once delivered to the surface is anyone's guess - but I don't think that the oilies would sign up for somethng that put an enforceable duty (and an unrecoverable additional cost or extra hassle) on them to deliver it up to IOF. That's not to say that they haven't been silly, and if they have, what a result for IOF.

[pcjoe] 03/7/2013 11:17

Maca - you have a point re possible unreliability of specific SWD sources of brine - I just think this will be less of a concern as numbers of Iof plant increase - problems will be averaged out across the area of operations - plant is very cheap compared to likely income -

EDIT

By problems I mean possible peaks & troughs of supply/ occasional tech problem - 'Iof will have to size plant to match peaks IMO

[testuser123] 03/7/2013 11:09

mickey - Actually Sirocco are going for solar by partnering with etrion in a somewhat unfavourable take or pay arrangement. See hxxp://www.etrion.com/dm/Press/pr_chile_30-01-13.pdf . I'm expecting this will further increase their opex.

Maca - I'm surprsied that you see the contract situation as a negative. From my perspective it is a barrier to entry and means that it would be impossible for anyone to do an end run around IOF.

[smilingmickey] 03/7/2013 10:57

Maca,

Having been an investor in Antofagasta (FTSE100 Company with large copper production in Chile over a long period, I'm quite familiar with the problems of water and power shortages in the country.

Antofagasta is resolving its own problems by investing in its own sources of power (hydro/solar/geothermal), buying a large water supply Company and installing desalination plants at their mines to enable the use of sea water as a source of process water.

IHMO Those Chilean Companies in the resource business who do not follow this kind of model are likely to be toast in the years to come due to the water and power shortages that will become more problematic. Only Companies with large financial resources can play this long game and with the exception of SQM, the iodine producers in Chile are not of this status and the iodine market size being much smaller than copper,is not likely to make them so. Copper is far more important to Chile than iodine and if competing for scarce resources copper producers will out muscle iodine producers almost every time

Maybe IOF's process technology is not earth shattering and another Company could enter the fray in the coming years as a "me too" alternative. However it currently is able to produce iodine at a substantially lower cost than Chile and is well located to serve the US market with home produced iodine. Were ano to arrive where would it get its iodine leases from? IOF have prime pick of these as being the only Company right now that can offer royalty income to the owners of the rights. So for the immediate future IOF is in a sweet spot.

[maca1212] 03/7/2013 10:29

sg,

I think Toyota's take on it (per their 2012 annual report) is that they have 7% and and want to shoot for 15% of the global iodine market.

They also reference downstream integration and a desire to use this iodine position to break into healthcare/pharma.

The thing about Chile in such a plan is that it has JORC resources in significant volume as opposed to possible volume each time someone sinks a new well, and does not rely on a patchwork quilt of legal agreements aand relationships with upstream suppliers.

The Chinese are moving in on the Mississipi Lime in a big way, and a lot of operators are cashing out of their acreage, either in full or part, the Chinese want the exposure to HZ fracking and tech as much as anything else but their presence may also impact IOF (which way is not particularly clear). I just hope they haven't been sold a turkey.

M

[superg1] 03/7/2013 10:23

Just to clarify

The whole point is that iodine in commercial quantities is scarce. Yes some are turning to recycling but it covers a fraction of the demand at higher opex.

Sirocco is easy to follow as they provide all the details.

Try looking at how much they have spent to get to 1200mt in the last few years.

Add $34m this year, $15m for Q1 next year, and $50m of they want to add seawater.


The plan is to get into the lower 30's opex.

I know this as I had comms with Sirocco, I was surprised who responded (the then president Simon Jackson), but then I don't ask straight-forward questions.

They are aware of and watching IOF, and say if IOF become a material producer it would be a concern for them.

So many times when I say 'research' it can involve direct contact.

I did much the same with SQM when they were hiding the fact they would need seawater and capex to cover that.

Shortly after a line appeared in the 270 page release about a pacific pipeline, so they did mention it, but I doubt any investors spotted it.

Another problem with Chile is the EIA wars. Courts have been knocking back plans to solve power and water issues for some times, due to the environmental impact.

SQM and Cosayach hate each other, so I bet it's 'fun' battling each others expansion plans as each one needs an EIA.

[worraps] 03/7/2013 10:21

skylite......absolutely...why wouldn't they? Which is why I think 'under the radar' concept has somehow lost it's way.

[skylite] 03/7/2013 10:19

I believe Jeff intimated during his presentation that he was pretty sure all US iodine procurement would switch to Iofina as and when.

[che7win] 03/7/2013 10:09

If the US sees IOF producing iodine in an environmentally friendly way, could they restrict the Japanese methods in the future?

[superg1] 03/7/2013 10:06

Maca

tech used in Japan and the tech used in the US owned by the Japanese uses harsh chemicals, and it's always been that way to produce iodine.

The use of the chemicals leaves Chlorine gas as a by-product which is deadly.

Toyota Tsusho involved in the US brine, therefore got involved in Chile as they saw that as the only iodine resource left that could be exploited.

Toyota want 7% of the market, check out the Algorta/acf minera link up and plans.

It has not worked out anywhere near like they wanted it too. They have seawater piped in, so will have opex in the 40's.

No matter where you look in Chile re iodine production all hit problems, and it has been compounded by the water and power issues.

It's the underground aquifers that have been the issue. All the action is in the Atacama desert and it is the driest place on earth.
They will have to turn to seawater and many big companies already have.

That means high power pumping stations, to get it 65km at 7000 feet up. Opex therefore will go up.

E.G. SQM would need $250m capex for pipelines, Sirocco $50m.

The situation is said to be getting worse and will decline to 2015.

Chile produce 58% of the world supply, Japan 21%. Japan production is in decline due to 50 years of extraction.
There are the odd lines in IOF releases covering these points.

Demand for iodine is going up about 4% per year.

This current Japan decline, US tech ban, and Chile issues serve up the perfect storm for iof to deliver into.

Matching opex and capex but without the issues would be good, but the capex/opex scenario is outrageous in comparison.

So when you consider the dominance of SQM in recent years, and Toyota's desire to grab a larger market sector (2012 results), then if IOF deliver and demonstrate what their plants can do, they are gone imo, as multi billion companies are out there in this business on much higher opex and capex than IOF.

Then you have chems divs like Dow buying in at prices way over what IOF can produce at, but it's not any those guys I worry about. I too would like IOF to run at least on the iodine, but when the bigger picture emerges, I think bids will come.

[gadolinium] 03/7/2013 10:00

Just for larification. I notice in the link it mentions mobile Ion exchange units, but Terry Brix's Arysta patent definitely uses carbon filters, so I presume that is what Arysta used in full size plant.

[gadolinium] 03/7/2013 09:56

Macca,
No problem, easy mistake to make.