Iofina Share Discussion Threads

[che7win] 05/12/2013 16:14

worraps,
the market for IOF shares is at a stalemate right now but there are three plants ready to go into production soon.

Add in imminent water news to that as a driver for the price. I think the longer we stay in this band, the more decisive the break out will be when it comes...but it probably needs news to drive it.

A time to relax for now and await developments IMHO.

[worraps] 05/12/2013 16:06

che7win, I hope you're right, as I've just done the same myself. This cannot last much longer I feel.

[che7win] 05/12/2013 16:03

Fest,
good opportunity to snaffle a few more below 160p. I reckon the MM's are doing a bit of harvesting before a rise.

Appears that we are balanced between supply and demand with 158p being buyer territory and 168p the selling area.

[worraps] 05/12/2013 15:55

Festario......couldn't have put it better myself!

[festario] 05/12/2013 15:44

In the meantime, the bid and ask prices are down into the 150's now.It's hard to understand, and unpleasant news to those of us who have friends and family running out of patience and funds. We desperately need one of these 'surprises' to turn into reality.

[1madmarky] 05/12/2013 15:15

It's the sort of thing that could be located just after an IO plant and before the brine goes off to the swd facility. 30,000 bpd must be able to supply a reasonable amount of heat, even if it is just to start the process off.

[1madmarky] 05/12/2013 15:03

Had a thought on the hot water side. If the brine is coming out of the ground at 40 degrees, why are they not using a heat exchanger? If it was relatively mobile you could move it close to where you are intending to frack or 're-frack plug into a producing well and use it as a source of heat. Once fully heated just truck it to the destination in the usual manor. This must be cheaper than burning oil to heat water. I mean the guy's at IO2 were complaining about the conditions they have to work under.

[superg1] 05/12/2013 14:34

Joey

I have no idea what it was but must have been something for a plant io4 on. A few have said kit is 'on the water' in recent weeks, so we'll see when it turns up.

It's not just about arrival in the US but customs clearance, which can be a bit like NHS speed at times. Could be 2 days in customs or 2 weeks, hit and miss really.

As for local supply frp, that shouldn't be a problem going forward over the next year or two.

Water is a near term interest for me. Not just for the first permit, but perhaps other permit applications and depots, including ND.

The first permit in Montana was for over 200k bpd, it was split down due to the 4000 acre feet trigger point.

You can't apply for volumes for more than 50% of what you have covered with intent to purchase letters, and it has to be more than one customer.

So they have customers for more than the 80k first depot for Montana.

If they do a similar depot in ND and sell all the water, it's $46m revenue at 80 cents pb so not something to ignore, especially as the full plan looks like 6 depots. We'll also have to see if they go the hot water route, which really bumps up the revenue. Let's get to the first permit and depot and see what they say re the rest. BUT 17 ND depots at least will disappear as they are on temp use permits irrigation to industrial use, and most others extract from aquifers which is not in favour.

It will be interesting to see how that side of the business unfolds in the coming months.

[joeywald] 05/12/2013 14:04

SG

You mentioned last week that some equipment had arrived from the Ukraine on 31st October. If the board are adopting an under promise and over deliver strategy perhaps IO4 will be fully complete and commissioned before the year end with only IO5 delayed to Q1 next year.

[superg1] 05/12/2013 13:08

CK

It reads like a nettles and thistles merger, neither have been sitting comfortably, and not a very attractive place to go for investors.

Lithium is abundant and brine is lowest cost extraction not mining.

Good old Mr Buffet has every vehicle down as electric by 2030, the next best guess is around 15%.

That's a lot of batteries, I do wonder how much iodine is involved in lithium iodide batteries as right now, that seems to be where the future is.

The blocker for current electric vehicles in the number of batteries needed. Lithium iodide are reported to be twice the power, therefore potentially half the weight and cost. The other point being that lithium iodide is a far safer option. Down the road, but clearly Lundin are thinking that, as they quote the Lithium iodide potential.

[superg1] 05/12/2013 12:53

jam

I haven't really paid attention to QFI recently, but I aware of all the comments about strong rises.

If such news is expected then surely the strong rises reflect the anticipation of news.

Check out the chasing of the PLE news which was 100% sure to arrive and it did in a timely fashion. 22p buyers on the day but around 13p now in quick time.

I hope it does well.

The IOF price doesn't look like it chasing anything on news, which right now is good, as if we take that as a guide, then I think it may be wrong.

[ammons] 05/12/2013 12:47

Thanks CK. Takeover when the SIM share price is flat on its back and, even after a 14% rise on the day, less than half the years high.

[superg1] 05/12/2013 08:27

Mad

I'd like to find more info. The recent withdrawal of expansion plans by Cosayach is interesting. The info is spot on as the details are in an official document.

Cos have had a right old time of it over the last few years. They went from 6000mt to under 2000mt due to various problems, illegal water extraction and so on.

SQM sound like they have taken a decent chuck out of production and recent rumours that they have closed another mine. It would seem SQM will be on less production than they were a few years back, so who is taking up the slack on Cosayach lost production. Algorta appeared and they are ACf minera too. The Algorta site had big plans and my estimate is that they have added 2000mt to the pot. They claim 3000mt this year, but the figures for H1 don't support that.

Growth of 3% pa would add 1000mt p.a. to demand.

Chile definitely went too hard and fast on production creating a competitive price market, which is now killing the companies that created the situation.

From details found so far on closed mines and reduced production, it sounds like the pendulum will now swing too far back the other way over the next year. That should force prices up, but that's exactly what Chile producers want and need.

The over-supply issue took a while to kick in, but the actions now just show how ridiculous the expansion claims just months back were.

In theory at these levels SCM Bullmine should just disappear off the map, estimates for them are the 600mt to 1000mt range. Earlier this year they sought funding for a pipeline at $33m, I can't see that happening now. I suspect they are on over $45 per kg opex

[madchick] 05/12/2013 07:48

Thanks SG for all the competitor updates. Good to know that everything is brewing nicely from our perspective!

[meadow2] 05/12/2013 07:41

jamonit - Water news will come anytime in the next two months; hopefully somewhat sooner than later as the application was 'Deemed Correct and Complete' on 30th September and determination to grant or deny is due within 120 days after that. There is a further period of 45 days allowed for objections, should the application be granted (which is usually a formality, we hope), before final permission is issued.

[the librarian] 05/12/2013 07:29

I thought you were moving out of IOF jamonit? Nobody knows the answer to your question, but usually it happens if you decide to sell and move on :-)

[the librarian] 04/12/2013 22:05

Monty, the rot started when the fertilizer cartel was broken, brief explanation here

[superg1] 04/12/2013 20:30

Here's one from the FT that sums the Chile problems up. The new gov however will make it worse for miners.




The corruption was rife for years, I think SQM got a deal of $1 per hectare or something like that. Cosayach and SQM have battled for years, family in government and so on. We have seen the lithium tender debacle mining minister resignation and now SQM bosses on fraud type charges.

I read somewhere that there have been over a 1000 legal disputes between SQM and others.

[superg1] 04/12/2013 20:16

Rock

Too much reading, and digging, certain lines and comments stand out.

As we pointed out at the time, inventory building to remove a 12-14 week lag in supply times didn't add up v intended production.

The production growth in H2 would have removed the supply lag in the same time period. History now, but that lithium merger, didn't happen over a phone call yesterday so those earlier news releases were suspect, just like we thought.

I agree re iodine, Sirocco had cash to burn with Lundin backing, you can have all the cash you want in Chile, it doesn't reduce the opex or capex needed.

There doesn't seem to be any point in returning to iodine production for them, they've had a decade of rolling the dice and even on record prices, they just couldn't make it work. The red back mining team have failed, and merged to go after lithium in Canada.

The merger keeping their finger in the iodine pie, is just a token gesture to me, so not to admit defeat, and show that Lundin do have failures. If the lithium idea works then of course they have rescued their reputation.
Interesting that they mention the lithium iodide battery market, which seems to be the direction most current lithium batteries will go.


SCM Bullmine will be next, but it's much more difficult finding public info about them.

They are the suggested highest opex operator. A dip to 40-45 would be nice to finish them off, but I'm not sure they can cope at current prices anyway.

Just 3 years back IOF were looking at making a good business from $25 per kg prices. For some that price would be a $15 million loss per 1000mt now.

At some point, as you point out, the production decreases will impact the market and send the price back up, but lesson learned, they won't chase high production again, and certainly not if IOF become a material producer.
There is a rumour that SQM have closed another mine. The last rumour was that 2 closed and eventually that appeared publicly with 400 job losses, so I'll be keeping my eye on that one.

[roboben] 04/12/2013 20:16

Today's update - With thanks to the person who drew this to my attention.

from Investec :


Iofina (IOF.L)
Investec Securities
Price: 168p | Target: 230p | Rec: Buy
Market commentary from two of Iofina's competitors in Chile confirms recent softness in iodine prices. This has prompted one (Sirocco) to suspend part of its production and delay expansion plans. In our view, this should underpin pricing around current levels. More importantly, it is further evidence of Iofina's significant cost advantage - its cash costs of up to $20/kg are around half those in Chile. We maintain our Buy rec and NAV-derived 230p TP.

Chile in context: Chile accounts for just under 60% of global iodine supply (32,000 tonnes in 2012). It is produced as a by-product from leaching nitrate ores in the Atacama desert. This is typically high-cost production ($30-40/kg).
SQM update: SQM has iodine capacity of 11,000 tonnes (one-third global share). It recently noted (2 Dec) that it expects higher production in Q4 vs Q3 but that prices were expected to be slightly (2-3%) lower. Further, it expects prices in Q1 to be 5-15% lower than Q4. This implies prices of $40-45/kg.
Sirocco Mining (SIM) update: SIM has iodine capacity of 1,600 tonnes (5% of global supply). It notes today that it intends to temporarily suspend production at one of its facilities (600 tonnes, 2% of global supply) for the whole of 2014. As a result, it sees 2014 production of 1,000 tonnes, although it expects sales of 1,300 tonnes via a reduction in inventory. It has also announced the delay of a planned 400-tonne capacity expansion from 2014 until 2015.
Implication for Iofina? While current pricing is below our modelling assumption ($50/kg in 2014E), these announcements suggest that pricing is now close to cash costs in Chile, a key competitor. Given Iofina's cash costs of $10-20/kg (we model $15 in 2014E), we would not expect these market developments to affect its expansion plans. We make no change to our forecasts and retain our NAV-derived target price of 230p.

[roboben] 04/12/2013 20:09

Baguette - I do hope you're right on this. I have to agree with your analysis on timescale.

I still see the best possible way forward as being along the lines of someone like Lundin buying a majority holding yet leaving IOF as a public company (as they frequently do), so that we can all maintain our holdings into the future.

Who knows whether that's a possible scenario, though? Time will tell.

I'm certainly very happy with the current situation and refuse to lose sleep thinking about takeover scenarios. Our current board is just about as good as we could possibly wish for when it comes to dealing with such things, and their interests as shareholders are well aligned with ours, so we can all relax about this issue, really, can't we?