Iofina Share Discussion Threads

[rogerbridge] 22/7/2013 12:00

SG, some moths ago didn't Lance hint that there may be a white knight lined up should there be a hostile bid, before IOF were ready to sell?

[dorset64] 22/7/2013 11:59

Salt Water disposal?

[bogg1e] 22/7/2013 11:56

SG1 cheers. Just to be sure, the Atlantis water depot IOF will be pumping water only (to Halliburton) and will not be extracting iodine? Also that the water being 40c is considered 'cold' and therefore commands $1 per barrel - 10 cents opex) = $0.90 margin? (But they may have cause to sell heated water if the customer pursues fracking?) TIA.

PS Whats an SWD?

[engelo] 22/7/2013 11:53

Battery: wonder what price you'd have to pay for 30%.....

[testuser123] 22/7/2013 11:52

Battery - with regards to the 30% rule, it can be waivered if the rest of the shareholders approve (simple majority required from memory). There's quite a few on aim which have got into trouble and a cornerstone investor has bailed them out, putting themselves above 30%, but the company has remained independant because it was approved by egm vote.

[engelo] 22/7/2013 11:44

ansana: the news that the janitor refers to (sounds a bit like Batman script, doesn't it) will I hope act as a steadying influence for those with nerves still jangling from June 24th. Hors d'oeuvre before the main course.

roboben: re Lundin very useful observation, thanks. Magic wand transforms dire threat into White Knight :-)

[superg1] 22/7/2013 11:36

Boggle

When I say cold water, I mean the brine coming up for iodine extraction. The premium temp is 40c for iosorb and that's what they get in OK. Depth determines brine temps.

I can't see iodine extraction ever appearing at Atlantis while they have the 3rd party brine model.

The original plan was to produce Atlantis water and pump it into the Fresno. Pre discharge it was to be cleaned up in a stripping process. this would have doubled the ppm going to the iodine plant, with clean water off to the reservoir.

The hot water comment relates to heating water at depots and filling trucks with hot water. Hot water for fracking uses less chemicals and produces better results, hence the surge in interest for hot water.

Many depots have it in ND. Armstrong is and easy one to look up, for that as they have the heating tech.
From research opex for heating comes out around $2.10 pb for the most efficient kit.

That's why it's important to have 3 depots instead of one, as the closer you are to any particular well activity, the higher the price you can achieve for your water.

[roboben] 22/7/2013 11:34

Battery - You're right about the threshold for making a formal offer, but I assume that it could be made in such a way that it was clear that all they wanted was a controlling interest. Or made, but not pursued aggressively.

Smaller shareholders are not actually forced to sell out unless the predator has accumulated 90% of the shares at issue and the predator wants the rest.

[battery] 22/7/2013 11:25

That would also then show their hand to any other potential suitors. Watch this space... :)

[bogg1e] 22/7/2013 11:23

SG you mentioned a few posts back from yesterday that the Atlantis water asset will be cold water (70%) extraction and at 50 ppm iodine. So can we assume that Halliburton (the customer for atlantis water) will be fed cold water only?

I thought cold water was now at 80% iodine extraction?

I believe it was rugrat who told me it was 70 ppm, so are we absolutely sure its 50ppm? Thanks in advance

[battery] 22/7/2013 11:23

Interesting Rob. Thanks for that.Mind you, I believe UK rules are that once 30% is exceeded a formal approach to buy the whole company must be made. I guess it doesn't have to be a sensible offer though.

[roboben] 22/7/2013 11:15

I think an important aspect of Lundin's "modus operandi" has been missed.

They generally don't "take over" companies in the way that many fear might happen here. By that I mean that they don't buy out all of the shareholders and take over the company completely, which is what I think so many are worried about.

What they actually do is take a controlling interest. They buy up enough shares to take a controlling interest, but leave the company as a publicly traded entity. I. e. Determined holders can continue to hold or trade shares in the company even when Lundin have a controlling interest.

How do I know this?

Well, it's on page 2 of the pdf referred to by SG in post 5414, as follows. (Emphasis mine.)

"The Lundin Group of Companies is comprised of individual, PUBLICLY-TRADED natural resource companies that are managed by the Lundin Family."

I don't think they're a threat in the way that some see them as being. Perhaps we could even see them as a "White Knight"?

[superg1] 22/7/2013 10:44

Lib

Sirocco did go as high as $38 opex and were selling early this year at $56 per kg. Probably due to the reason you mention.

Then more recently the comment about big contracts dropping to $55 per kg.

Sirocco were on about 1200mt, and they have quoted 388mt as their intended increase this year.

1200mt at $55 at the $38 opex would give $20.4m profit.

They have mentioned $35 more recently so $24m profit.

Capex this year $34m forecast.

Iof at $15 opex at those levels would return $48m profit.

In fact every time I do those calculations for IOF, I do a bit of a Supreme Mo and think, 'that can't be right', but it is (just checked 4 times)

So it just shows what can be achieved by IOF if they deliver on plants. They plan to be on an annualised rate, of in excess of what Sirocco are doing by the year end.

[the librarian] 22/7/2013 10:21

I suppose the weak point with Sirocco is that they only have two main very large customers (according to them), I don't know who it is and whether they are part of the same group.... but that does make them vulnerable, which was shown recently when their Iodine prices dropped.... I was assuming that those two customers could put pressure on Sirroco to drop the price.

Anyway, as a business I would feel quite jittery if either of those main two decided to go elsewhere, they really do need to get a more diverse customer base, but then there is always China or India to sell to!

[superg1] 22/7/2013 10:14

I've spent couple of months looking at Lundin after realising they were connected to Sirocco and that I had been in comms with Sirocco.

EG this is another bit they said re the iodine sector and their position-:

'We expect our unit operating costs to drop towards the industry average of around $30/kg. This leaves us a significant margin at current iodine prices. There is absolutely no indication that demand for iodine should materially drop in the medium term. Obviously, if it did and the iodine price was to drop then our margins would be affected.'


If they think low 30's gives good margins, how about $10.

Their capex this year upgrading bits is $34m, that will get them 388mt extra. To get to the 1600mt region.

A $15m ball mill is planned for Q1 2014 to hopefully solve the 'wear' problem. I think it's corrosion, not wear, which gives them a serious problem.

That could get them up to the 2000mt mark.

So $51m over the next year to hopefully add 800mt, and a hope that opex drops to the lower 30's.

Meanwhile iof could do 800 mt with $4m capex, and opex 3 times less. Sirocco were no threat of course, until you realise who owns them.


Back onto SQM, still in decline, and they need to do something.

[engelo] 22/7/2013 10:00

SG: thanks for the added detail to the Lundin story. Seems clear now that out of the various possibilities they are the greatest threat to the happy future of IOF shareholders. Just like the more cautious of the instis, they will be waiting for confirmation of the output and margins from I02/I03 which can then easily be extrapolated to the 'infinite' series following if IOF are left alone. The cobwebs currently around I02/3 will be swept away.

So the 'ping' is a hybrid of instis finally becoming convinced, T/O assessment becoming fully realistic and the interaction of both these factors: plus the possibility imo of a contested takeover. Tinderbox moment. All this will happen at the same time, nobody can delay taking action and it's not far away.

[superg1] 22/7/2013 09:51

Well they know plenty about them H, opex, capex the lot. Doh !!!!.

[hurricane.] 22/7/2013 09:43

Superg1 the Lundin ruler may already be out and taking measurements!
IMO dyor

[pcjoe] 22/7/2013 09:07

Ansana - Thank your uncle for us, that is all much clearer - Its a happy chance that he got that job as janitor at IOF - I believe your cousin is also dinner lady in the IOF canteen? - Tell her to keep her ears & eyes peeled - just not into the coleslaw please :-)

[engelo] 22/7/2013 08:47

Thanks ansana: all crystal clear now :-)

[noli] 22/7/2013 08:38

I have been looking daily, nothing up to now or public comments found.