Iofina Share Discussion Threads

[che7win] 09/11/2013 16:52

Superg,
Thanks for your reply. I think they want an increase next year with the new mill in place.

[crazycoops] 09/11/2013 16:49

I don't recall we have this info on IO2 but we do know that IO1 produces high grade iodine:

"IO#1 is currently producing circa one metric tonne (MT) of high grade iodine per week." This was from the production update in December 2012 -

I believe the 'grade' or 'quality' of iodine is different from whether it is 'prill' or 'mud/cake'. Prill is a process of refining iodine into a different form (needed for some product types) whereas mud/cake is a rawer form that contains higher amounts of water. Some Chile producers only sell their product in prill form which is more processed than many users need. This gives IOF an opportunity to sell their surplus iodine in mud/cake form at a lower price than is being charged for the prill - thereby gaining share from 'prill only' producers. But it is different from quality. You can have low/mid/high grade prilled or mud/cake.

This is my understanding but I only take a broad interest in the technical details so I stand to be corrected.

[writz] 09/11/2013 14:28

Titus -

Thanks for your input - I only just got back to the thread today.

Since you are not picking up your quill, is there (in your view) anything particularly worth reading on the "interplay of events and participant (investors, insiders, traders) treatment of such changing or developing events and influences"?

Writz

[bobbyshilling] 09/11/2013 14:18

Sg, your post 10805 - thank you for the formula.

[jointer13] 09/11/2013 14:11

the timing/luck for iof could not have been better. all we have to do is keep rolling the plants out.
demand increasing all the time. 18,000mt in 2000. 31,900 in 2012. and many new uses for various products.
our competitors would give there right arm to be in our position
we are in a superb position.
roll on the rollouts

[spike_1] 09/11/2013 13:54

Hi sg, re your:

remember, the old line-:'It's too cold to snow' I love that line, try telling them that in the Antarctic.

I've never been to the Antarctic, but having been in Siberia for while, and I can tell you that actually, the colder it gets, the more unlikely it is to snow. This is because snow is of course water, and cold air cannot 'hold' much water.

Normally when you breath out, moisture in your breath is just absorbed by the 'warm' air. If you breath out where it is really cold, it turns into a visible 'cloud' because the air is too cold for it to be absorbed.

Have a good week-end - Mike

[superg1] 09/11/2013 13:13

Monty

From the same report

As the year has progressed, supply and demand have become very stable; perhaps even out of balance in which there is an over supply of iodine. It is difficult to state with certainty that excessive inventory exists, but if additional price decreases occur in the fourth quarter, it would tend to support that concept. The newest mining company in Chile is still not at 100% capacity but is headed in that direction. Other mining companies seem to be producing at full capacity while one older mine that was expected to close has not. Plus all the small mining companies have managed to stay open even as prices have fallen. Most buyers of iodine are being offered all the material they want, and requests for additional needs are not being declined by Chilean suppliers. Some mining companies have fought to keep prices higher, for obvious reasons, but sometimes less obvious ones. In an attempt to rebuild inventories, at least one mining company has purposefully stated they want to limit sales and build up safety stock to levels they carried prior to the Japanese earthquake and tsunami.

points in that-:

'while one older mine that was expected to close has not'

That now has it was SQM's I believe.

'Plus all the small mining companies have managed to stay open'

Managed to stay open ? That tells us they are right on their limits and we know so from opex.

'Some mining companies have fought to keep prices higher, for obvious reasons, but sometimes less obvious ones'


All the evidence x many is that they are struggling with this price, which they have brought on themselves through all trying to get in on the act.

[superg1] 09/11/2013 12:46

Monty

Good info re the conference call, Sirocco had been selling at the lowest price which some called a stupid move, and it skewed views on the going rate.

So that comment makes sense, they were struggling on lead times, so the customer demanded better prices it seems. I suspect India or similar.

That tells us Sirocco were not happy selling at lower prices, so were removing the leverage the customer/s had on them.

So it all points to defensive moves on pricing, for SQM and Sirocco.

It has more or less told IOF, at what price Chile are not prepared to go to, re sales.

EDIT

Just to add. I recall Sirocco selling at $56 pre inventory building, which at the time of the sales was under the market rate.

From that I'd say they didn't want to go down the road of under $50.

We'll see how it goes but the price of iodine may be bottoming out and due a turn at some point as costs continue to bite in Chile.

That of course excludes IOF if they significantly add to the production. But at least we know prices where the Chileans don't want to go.

[monty panesar] 09/11/2013 12:38

Just found the quote re poor quality iodine:

"In a new twist to the Chilean iodine market, some material currently being offered by a few Chilean mines is below traditional quality standards, and the sale price reflects this lower quality.  This type of material is deemed unacceptable for use in complex products made by some manufacturers.  Prices for this lower grade iodine are considerably less expensive and are a real benefit to those companies that can use it."

[superg1] 09/11/2013 12:36

Che

From last years report Sirocco were to spend $34m on upgrades. They have $15m factored in for that mill for Q1 next year to combat the 'wear' problem.

That ALP I believe cost them $60m. It would be interesting to tot up what they have spent in the last few years to get to a figure of 1500mt.

Just looking at the $51m it it doesn't equate to much of a production increase, and the opex is there to see.

It sounds like the likely new government want to end the generous 'concessions' given to mining companies over the last few years, and start increasing taxes for government spending. That surely points to margin squeezing from another angle.

The deputy mining minister of the current gov had to resign over apparent corruption re an SQM tender re lithium, tender now null and void.



Chile deputy Mining minister resigns after lithium debacle (Oct 12)

Critics had also blasted the ministry for awarding the concession to SQM, whose chairman is ex-dictator Augusto Pinochet's former son-in-law and whose chief operating officer is the brother of Mining Minister Hernan de Solminihac.

[monty panesar] 09/11/2013 12:32

In the conference call Sirocco said the reason they had to stock pile was they had to make sure they had inventory in the local market.When negotiating deals previously they could not supply a lot of overseas contracts within a few weeks due to transportation issues(not helped by the port strike)and so had to accept a much lower price due to the additional time factor....or that is their excuse for the stockpile.

I did read somewhere this year there has been some very poor quality iodine produced by some Chilean producers whether they are one of these or not I don't know. It probably explains why IOF are going to build a Prill Tower so their product commands a higher sale price.

[che7win] 09/11/2013 11:33

Sirocco's cash operating cost for the quarter just ended is $41 per kg of iodine produced.
I don't know if that includes the increased drilling they did to upgrade inferred resources to indicated:

"With drilling completed at the end Q2 2013, exploration costs at Aguas Blancas in Q3 2013 and for the balance of the year will be lower."

"Sale volumes, as well as decreasing iodine prices, negatively impacted gross profits in the first two quarters of 2013.
Tonnage mined in Q2 and Q3 2013 increased following the commissioning of the slurry plant. All mined production is being screened to produce fines for the slurry plant. The decrease in grade was largely due to the area being mined."

Right now, Sirocco are on $10 margins per kg, that's not a lot.

[che7win] 09/11/2013 11:16

Superg,
Post 10818.

I have no idea what you are talking about either, maybe renationalisation and state taxes?

:-)

[che7win] 09/11/2013 11:07

Sirocco,
Their debt has risen from $11m to $50m since last December but overall they have more cash than debt.

They made no sales of iodine in the last Quarter and sales for the first 9 months if this year are half of that from 2012.

They have $40m of iodine inventory, up from $16m at the start of the year.

The balance sheet also looks healthy.

Their power costs have increased 5% and labour costs up over the year on the iodine side. Drilling costs doubled.

Key fact: "The Company sells the majority of its iodine to two customers".
Maybe something has caused them to lose this business, only a guess but that could be the key to their lack of sales...

[superg1] 09/11/2013 11:00

Che

I've no idea what you are on about, but it sounds good.

I've spotted something too, but more about IOF.

So on that point, 9. :-)

[che7win] 09/11/2013 10:31

Netley,
You have been well and truly caught out and you know it thanks to letting slip your valuation criteria on the TUNG thread. I noted it down at the time.

You now have to admit that on your own valuation criteria that IOF is worth 320p based on 2000MT in 2015 and no water revenue.
Easily achievable as 12 plants operating from the start of 2015 would only need to be producing on average 167 MT each at $30 kg margins to achieve this. Not including water, a big margin of safety.

But it gets better, as your rudimentary valuation discounts future expectations back to today. So your valuation criteria is 320p NOW for IOF (and I would argue a lot higher).

You are well and truly exposed. If you argue with the above, then you are now arguing with yourself.

PS: You fail to see that the brokers have used more conservative plant estimates with no water revenue (in reality you know that). That's why their broker targets are the same if not higher than before.

[superg1] 09/11/2013 10:20

ors

I haven't found anything yet to support Sirocco's cold winter claims.

Yes Chile had some snow, which is rare but it was a little bit and gone within a day or two.

It's always very cold at night in any desert, especially one 7000 feet up.

It sounds like a Sahara explorer talking using excuses of more sand than usual.

It's just as well Sirocco are not on the AIM

But then remember, the old line-:

'It's too cold to snow'

I love that line, try telling them that in the Antarctic.

[orslega] 09/11/2013 09:41

declining share price for sirocco investors - 2 year sp

[orslega] 09/11/2013 09:36

see from Sirocco results this week (apologise if posted already, quick scan didn't see them)....hmmn, see some stock piling going on but bottom line is production forecast has dropped....didn't realise Sirocco was that small...in iodine terms....only 1,500MT annual production. IOF could feasibly have that run rate by Q1 2014, possibly earlier : )

VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 11/07/13 -- Sirocco Mining Inc. ("Sirocco" or "the Company") (TSX:SIM) is pleased to report financial and operating results for the three and nine month periods ended September 30, 2013. The consolidated financial statements together with Management's Discussion and Analysis will be available on the Company's web site (www.siroccomining.com) and on SEDAR (www.sedar.com).


Iodine production in the three months ended September 30, 2013 ("Q3 2013") was 320 tonnes, a 24% increase over the same period in 2012 ("Q3 2012"). Following an unusually cold winter which impacted the flows from the heap leach pads in Q3 2013 and the completion of modifications to the mobile mining screens to improve equipment availability, increased production is expected in Q4 2013. Sirocco is now forecasting to produce approximately 1,500 tonnes of iodine in 2013 compared to the original guidance of 1,600. With operating costs relatively fixed, unit production costs are forecasted to decrease in Q4 2013.

In Q3 2013, the Company successfully implemented a new iodine marketing strategy. This strategy allows the Company to be more flexible in meeting customer demand by reducing the delivery time of product from the historic 12 to 14 weeks to one to two weeks and by improving its ability to fill larger order sizes. In order to implement this marketing initiative, during Q3 2013, the Company curtailed sales to allow for the build-up of inventory and commencement of delivery of consignment stock to key geographical areas. With this build-up of inventory in place, sales orders have recommenced and related revenues will be recorded starting in Q4 2013.

[sandbag] 09/11/2013 09:26

escapetohome,

My belief is that the rise has only just started. There is so much potential here.

[escapetohome] 09/11/2013 08:46

My CCE tip has sky rocketed - director buy again recently - but can the rise continue- to be truthful I sold out, because it was one of my trading stocks.