Iofina Share Discussion Threads

[diggulden] 18/12/2013 14:44

I couldn't agree more ramu, it wasn't a pop, more of an acceptance of how two completely different posts, both well written and informative, but completely opposite.

I happen to know that Matrix is in circles that will have a much better understanding than the average PI.

[iofra] 18/12/2013 14:42

ramu
I think it would have been better to copy matrix's post to the other thread

[ramu kumar] 18/12/2013 14:35

dig, that was the whole idea of reposting fanny's post here. We have to glean the factual and relevent info from these type of posts.

[worraps] 18/12/2013 14:35

digg....I think that if we had all taken everything, EVERYTHING, that has been forecast here over the last few months with a pinch of salt, then an awful lot of people would have avoided the pain that exists here now.

[che7win] 18/12/2013 14:33

Matrix,
Good post, who were you talking to in the company?

Regards.

[knackers] 18/12/2013 14:30

Matrix: Good post. BZ!

[diggulden] 18/12/2013 14:24

What a contrast between Matrix's post and the one Ramu copied from a different board, one sounds like they understand the business, the other doesn't.

Just goes to show that you have to take everything with a pinch of salt. I know which post I think is more likely to be correct.

[eddyeagle1979] 18/12/2013 14:21

Great post Matrix!

[bogg1e] 18/12/2013 14:20

Im going to throw in a conspiracy!! Iodine companies are being asked to stockpile iodine due to increased levels of fukushima radiation fall out being detected across the united states (which is true by the way, even though public access to government/military owned radiation detectors have been taken "offline", there is a radcon website in the US which shows the elevated levels of background radiation beyond the acceptable safety limits of airborn radiation, which is put together by scientists and scientific institutes via the internet) but Iodine companies are not allowed to disclose this for fear of public panic!!!

Im joking. However Fukushima is an important side issue to bear in mind and keep an eye on. Thyroid problems are beginning to increase dramatically, especially in young children, across the eastern Japanese seaboard (iodine is the remedy to this). The fact is iodine will become increasingly important, not for a while though; the Japanese govt passed a "state secret" law to prevent any disclosure of Fukushima/radiation levels in the public domain, but when hospital cases relating to radiation sickness, however subtle, such as thyroid cancer, or a decrease in the IQ of children etc begins to multiply across the northern hemisphere, the resulting outcry will make iodine a very valuable chemical. Give it 18 months.

[spike_1] 18/12/2013 14:20

Yup my thanks too Matrix.

[naphar] 18/12/2013 14:00

Matrix, a good and in my opinion down to earth and realistic summary. Thanks!

[ramu kumar] 18/12/2013 13:48

Posted on the other thread....

fanramptastic mate 18 Dec'13 - 09:15 - 6509 of 6520 3 0

Well what a day that was!
Having read and reread yestesdays RNS I have concluded that something is not right. Something or somethings?

Firstly fo IO#1, 2 & 3 to be only poducing a combined 1mt a day tells me that either the ppm in the brine is not up high levels, or the flow rates of the brine are not sufficiently forthcoming, a combination of both or the technology of conversion is not as good as hoped and therefore much less efficient.

Interestingly is the fact that the 1mt per day poduction is stated as sufficient to fulfill chemical divisions needs with a running surplus that is being stockpiled for possible 2014 sales. I was fortunate to have attended the presentation in London back Q1 this year and reading back on some of my notes it was stated that the chemical division currently processes 400mt per annum for existing derivative orders. Also stated that the labs have an overall capacity to process 800mt per annum but that they didnt expect that capacity to be filled this year. Any further growth beyond 800mt would involve new facilities to be built.

So reading the RNS again we have a production rate of 365mt per annum which has already started being stock piled, tells me that there must already be a drop in orders for the derivities. Now with the chemical division derivities being the revenue stream for the company, Im guessing this will translate into a significant reduction in the financial growth of the group, sufficient for a bigger than expected loss to be reported in the 2013 year end results.

Stock piling for possible sales in 2014 also tells me that dispite the claimed low opex for iodine extraction, with the continued drop in the value of iodine they are finding it hard to find takers for any surplus at a price that turns a profit. Does that mean therefore that because of the inefficiencies of the iodine extraction experienced to date with IO#1, 2 & 3, that the true opex is a lot higher than stated?

Not really knowing, but only guessing, I think that there is a fundamental flaw in the business model and the contracts involving the use of brines from a live oil exploration operation. Convenient as it first seemed for the oil company to lend the brine for iodine extraction, there seems at times to be an operational conflict of interest which will always be resolved in the oil companys favour. And that I believe is why IOF are now looking at utilising the old wells.

On a final note, water. It is fair to say that any water license is not priced in to the sp, but neither is bad news. If the water license is denied absolute, then expect futher big drops in the share price

This is all expressed as my own opinion, and in no way should be taken as anything but an opinion.

Have a nice day
fanny

[iofra] 18/12/2013 13:40

matrix
Have you been on a visit to IOF?

[square1] 18/12/2013 13:32

Very good summary. Thanks

[che7win] 18/12/2013 13:31

Up,
Certainly rational for me, I old more now than ever, long term it might just be a blessing in disguise. For instance, if a takeover happened now at the broker price target, the outcome would be much better for me than last week

[matrixtrader] 18/12/2013 13:28

Ok so after a bloodbath of a week lets try and get some perspective I will not deny that the statement was not at all what was expected by any of us in terms of numbers but we did ask and we did get. It appears that Iofina previous management (Chris Fay/Lance Baller) have a lot to answer for in terms of going around to institutions and 'talking up' numbers and operating performance. What was needed was a kitchen sink approach that many new management teams adopt in order to get the price to a realistic level of expectation and then beat therefore making previous management look bad and themselves good. A good example of this is Nighthawk, talked up, failed to deliver, quiet conservative team now that are delivering and showing growth. Inventory is not building due to lack of sales, the final order came in late and the inventory will be sold in 1q 2014 so 1q will be higher than expectations. They are not failing to sell. They have the customers and are supplying them and what we will see over the course of the next few months isnt a huge industry player in iodine production, but a chemical company that supplies itself at low margins showing strong growth. This was just a timing issue, happens all the time with business. Lets look at costs and forget $10kg costs as this would be when/if plants were working at 100% operational efficiency and delivering the type of MT that most here (myself included) expected, ie approx 200mt for standard units and 400mt for io2 due to brine levels. I would say use a conservative $20kg in forecasts and sales price of $45. The chemical business will add around $5-$15kg mark up to that but to be on safe side from now on lets say $5. So as an integrated business i still think that they can make around $25-$30kg profit per MT. production – now back mid year they told me that when io2 was running at just over half production and io2 accounting for 90% of this it was doing between 800 and 1100kg per day average. So how are we on 1000kg for three units apparently fully optimised? well we are not. IO1 doesnt contribute much, maybe 50mt at higher margins so i basically ignore that. IO2 has had difficulties due to down time and operators down time in particular. For some of last few weeks it was shut down for half a month producing nothing! Io2 was bought from an old producer and although brine flow is now at max, they are still tweaking. Io3 has reached max at 25k bpd but still they are making operational tweaks here and there. Give it a month and i would say that io2 and io3 can deliver around the 1.5mt mark between them per day. Am i being hopeful and rose tinted? i dont think so but remains to be seen. I believe that the 1000kg average took into account downtime for io2 and the fact that io3 has only just got up to full production levels. Lets see where we are in a month. Io3 is apparently a stunning piece of kit, far superior to io2, and io4 is superior to io3! thay are encountering a learning curve as all small companies do, and they are learning. They have two teams that can build two plants simultaneously now and going forward. I would expect io4 and io5 to be operational by beginning to mid feb to give them a bit of time. Would suspect io6 in April to be complete. Going forward i would say use the following numbersio2 – 250mt per year conservative (averaging 250ppm)io3 and plants going forward – 150mt per year averaging around 125ppm to 150ppm forget the 500 ppm and 700mt units spouted about! thats the realism there and i expect those numbers to be beat but lets see them do it first. People are asking why only an additional three plants? lets forget past guidance and look to the future. They are delivering six units next year adding around 900mt to 2014 exit rate. potentially more. but why say they can go up to io10 or io11 and fail again. Play it slow and do it right this time. So with the additional units look at the 700-1000kg production target. I think thats very achievable. in terms of numbers they should do round $35m revenue and $17.5m profit before tax (no tax to be paid due t losses) in 2014 on 700 on 1000mt they will do $50m revenue and $25m profit So around the 8-11p eps in conservative terms. Thats not bad for company just making its way to profitability. So they are currently trading around 10 times. But expansion and growth of production which now seems to be happening on a realistic front should demand a higher multiple as on six units they can more or less add 100% to production next year and 50% the following should they last that long. The loan is not really an issue to me, they have a year and half odd to pay that off, in that time they will be generating some decent cash and worse case scenarios are that Stena extend the loan or do a small cash raise ina years time but would they need too? 10m is nothing to raise for a company delivering on that growth rate. Institutions would snap it up. On six units they should do a minimum of 3mt per day or in revenue terms once optimised. Thats revenue per month of $3.2m at $45 or profit per month of $1.8m without any uptake from IOC and with new plants coming online at a reasonably fast rate.I would say that they can build in 14-16 weeks going forward per plant but remember they have two teams building at once now. i am not saying i am at all happy with the scenario that has unfolded but i have just downgraded my forecasts and instead of focussing on the core business that appears to be delivering. Forget Chris Fay promises and Lance over exaggerations (polite way of putting it?) this new team is capable, stable and will deliver, it will just not be as fast as they are delivering to real business timelines and not blue sky fairy tale ones. They are a low cost producer with an integrated business model that will up their output in iodine and up their chemical division sales yoy Bears are rightfully savaging this at the moment but with two new plants built and roadshows happening soon across the US and canada i expect this will be short lived. Not saying they were wrong or the bulls right. There is a medium level that we all have to accept. We wont be at 400p by end of 2014 but with good growth expansion and delivery from what appear to be a new capable, down to earth team improving and learning all the time we should be ok! Thats all i have to say back to licking my wounds!!

[jackabite] 18/12/2013 13:17

nellyb

I think what you should be saying is Superpooh should man up? I only want an apology?

it's not like it's difficult to admit when you have been out of order?

It's a man thing, you just say sorry and move on! people do it all the time!

[uppompeii] 18/12/2013 13:14

Disappointing drop but aren't you all longtermers? Surely only the over geared and long day traders have been hit here? Everyone else was in general agreement with the prospects, numbers and share price targets being published on here from those in the know. If so, this is a hiccup, a delay, a paper loss. No one was selling for years anyway? If that is the case it will be back at some point in the future. Surely that is the rational take?

[investmentguru] 18/12/2013 13:12

I made a shedload from KMR as well, especially the warrants. There are similarities with IOF, in terms of everything taking a lot longer than originally planned.

[nellyb] 18/12/2013 13:09

jack, ffs grow up.

[neddo] 18/12/2013 13:05

still a good bet , seems they have been let down by the suppliers, nothing bas changed , jack sh--t has had his fun and should go away, netley deserves some credit for not crowing on here nd calling it right, shonny , just another crow. I'm sticking here, can't be far off bottomed, I have never added from my initial buy , but I may now.

[jackabite] 18/12/2013 13:02

warrenearle

I will be out of your hair soon as superpooh apologieses.

It's as simple as that, he says sorry for what he done and refrains from doing it again in the future. If that happens I will accept and move on with no intention to return. I am a man of my word.

[che7win] 18/12/2013 12:54

Worraps,
Apologies, what I was saying is that the fund raising they stated was for working capital also.

If we aren't buying in raw iodine from Chile, we don't have 60 working days credit. Meanwhile, we also have a delay before the finished derivatives cash comes in.