Iofina Share Discussion Threads

[bocker01] 26/1/2014 18:51

The revised note fell far short of what was required to remedy the situation. But Numis were in a difficult position!

[orslega] 26/1/2014 18:33

yes this last week has certainly been a fiasco, bad start to relationship with Numis, and very unsettling for all shareholders. No doubt many got stopped out on back of their first note. Yes, some good work in pressurising Numis into a revision but much damage already done.

Have been fortunate to see both Numis notes. That is the Numis note dated 22/1 and Friday's, 24/1. Unfortunately these cannot be posted on any board.

Just to give a flavour of what Numis said in their revised note on Friday:

"Our P&L forecasts change slightly after further conversations with management and how we see the business consolidating/eliminating its revenue/cost streams. This is the only change to our modelling of the business."

"Forecast change slightly" and "only change"...keep that in mind when you see snippets below.


Operating (loss) profit first note 2013 $(3.9)m
Operating loss/profit revised note 2013 $(1.9)m

Loss reduced "only" by 50% (and from nowhere, another $1m of admin costs added arbitrarily in revised note.....)

Operating profit first note 2014 $1.9m
Operating profit revised note 2014 $10.6m

....only $8.7M more EBITA.....another "slight" change...


Operating profit first note 2015 $10.3m
Operating profit revised note 2015 $19.1m

......only $8.8m more EBITA.....another "slight" change to P&L....


Operating profit first note 2016 $ 17.1m
Operating profit revised note 2016 $ 26.4m

.....only $9.3m more EBITA....another slight change........and this assumes (incorrectly) that IOF have no roll out after FY 2015. IOF have never said that.

There are other changes on capex and the convertible loan position - material changes without any comment - oh, I forgot - Numis didn't mention in their headline the "slight changes" to the cashflow and balance sheet. lol (Well not very funny really as those changes were also material)

So result of Numis efforts? Yes, surprise surprise, a material change in EPS - (they got cost of sales badly wrong) eg 2014E First Numis note = 0.3 p/sh; revised note for 2014E 4.7 p/share. So 15 fold increase in EPS between the first note and the second note BUT both summaries say BUY but with SAME target 156p. Couldn't make it up. But there again who takes notice of brokers.......

Doesn't take an accountant to see those "slight" adjustments aren't slight!

There appears to have been a serious disconnect between Iofina and Numis in this unfortunate saga. Brokers notes are what they are - who bothers, some say ignore, what do they know etc - but there are serious questions the Numis notes raises.

imo Iofina now need to get a firmer grip and formally clarify matters in their next update. They have of course been made very aware of shareholdings views right now.

I see this as a temporary blip (buying on Friday at 81.5p, thought that would never happen again, another buying opportunity that is, lol) - having said this am very optimistic going forward.......but would like more clarity from the BoD, not the current confusion.

Good time to issue the GMP note, if that is the plan.....pigeon, are those definite plans this week for roadshows??

[superg1] 26/1/2014 18:31

Dcgray

Applications will have to be the same start point, but IOF will be a whole lot wiser.

If you know the water rules, they should never have put an application in for 10k acre feet, it's explained in detail on their site.

Basically if you go above 4k acre feet in any application, it puts a huge amount of work required by the applicant, and would probably take 4 times longer.

As for ND, nothing changed imo, unless advised otherwise, you have get all your land leases and rights of way before you can apply for a permit, it can take time.

So many times, we have mentioned why don't they explain the water in detail. Well if you note posts earlier, I mention contracts and that's where it gets too complicated to discuss, it's been bad enough over the year for some to get the basics re the different water aspects.

There is a date set for presentations I understand near term. That Crystal/Prill query needs clarifying re pricing. For now I'm going with what Industrial minerals say not Numis.

[rhwillcol] 26/1/2014 17:43

Thank you pigeon: you sound like a very wise old bird!

[pigeon1] 26/1/2014 17:06

Well it's a huge achievement by certain folk and a lot of shouting that they redid it at all. It is still very very conservative but at least the the imporatnt eps forecasts have been improved. The critical thing is that their financial model created uncertainty and some dramatic selling so hopefully now they have admitted they were wrong (unheard of frankly) it will calm some nerves and maybe a few people who were selling will now be firstly stopping sell orders and possibly happy to buy back in. We have lost 20% since that numis note was releeased! I hope the girl is relieved of her duties for her incompetence.

GMP note coming soon and they were v critical of numis apparently so hopefully no surprises comimg there

Roadshow in a week so presumably they are coming to talk about something so i'm hoping that means news on a couple of fronts at least this week.

Here's hoping..

[neilgw] 26/1/2014 17:04

Pigeon1... when did the new note come out and do you have a link to it?

Thanks

[bocker01] 26/1/2014 16:59

Unfortunately Pigeon, the new note is an improvement but understates sales and overstates costs materially.

[pigeon1] 26/1/2014 16:51

Is everyone aware that Numis have reworked their financials and republished their buy note reflecting that?

Complete balls up by them causing a lot of uncertainty but at least they have retracted and put out a new one - very very very unusual.

Hoping things settle down now and BOD push some news out this week.

Any thoughts?

[engelo] 26/1/2014 16:42

dcgray: Believe IOF are holding the ND rights application(s) until the MT outcome is achieved. There's a considerable amount of work to be done before any application is submitted.

Assuming approval for the first permit it would make more sense imo to devote effort to pursuing the other 2 permits planned in MT.

ND permit applications perceived for political reasons as more of a problem than MT.

[dcgray21] 26/1/2014 15:03

SG1

Couple of queries . Just following up on I think it was Bobs point - and idea what is happening about the ND water rights application ? Secondly and apologies if previously covered , if/ when IOF get water rights in Montana for 80k bpd then to increase this right to 200k bpd does this involve another submission process like the current one or is there a fast track approach ?

Many thanks

[superg1] 26/1/2014 14:17

It was full survival gear stuff, so a quick nod of heads and postponed :-)


The answer re contracts is that no one applies for a water permits with contracts.

That is meant to be confusing for those head scratching saying, what the ..... is he on about.

I spent 6 months in 2011 thinking how the ....... does all this work. Two years later I worked out about 75% of it.

So if you don't know the answer, then it shows just how little everyone knows on the subject. It's an important point.


The most common cause of fear, is lack of knowledge. It a snake expert picks up a the brightly coloured snake you nearly just trod on, you'd be in fear of his life, if you didn't know about his knowledge base.

If you don't know the difference between a lion a koala, but know that there are things out there that can and will kill you for food, then which one do you run from? both of course.

So investors panic as they know very little about the shares they invest in, and they know the best thing to do is run, as that is what everyone else will do.

Risks are always there but so far this story has been all greed and fear, with missed timelines and other events, just like any other share.

If anyone could tell me any company, anywhere, that achieved all their goals in the timeframe they said they would, then I'd love to know who they are.


On this particular train, as I have no set time of arrival, just a destination. whilst disruption is annoying, there is no better train company out there that looks to have such a great destination imo.

I'm sure some could pint to others with great destinations, and could switch on platform 4, but they imo need to do their research, as many trains I look at, don't have any tracks to travel on, or any obvious destination identified. Some don't even have a train, and it's waiting to be built, at a huge cost, and when done they don't know if it will work.

If one derails on the way, with the track in place, and destination emerging, then that's not my fault. That's down to the train driver, and maintenance team.

Get the team out, fix the track, and crack on with it. If the destination looks like it's never going to happen then time to rethink, but then there is more than one destination here, and all so far, are still in play.

[bobbyshilling] 26/1/2014 11:59

Sg, Select energy = very interesting read on the water business. Huge numbers.

I was talking earlier about making informed decisions on what we know and can work out, and drawing a logical conclusion. Whilst I accept that nothing is 100% I am feeling more relaxed on the water front.

Thank you for your in depth replies. By the way, enjoy your golf - if you were playing where I live, you might as well be teeing off in the Atlantic!

[superg1] 26/1/2014 08:02

Water

Just anther point that appears to be the case. Don't confuse contracts with letters of intent. There is a very good reason for the words letters of intent as mentioned by IOF.

It fits in nicely why the water bureau use the words 'water marketing'.

I will try and find the specific point on that later.

10 house points for anyone that knows why?

Meanwhile wind, rain, floods, marsh-like ground, oh yes, winter league golf, fab.

[superg1] 26/1/2014 01:08

up

I haven't seem one yet that is accurate on any share.

I have to say though, Numis have a good understanding of the market, and it's a good read for anyone that doesn't know it.

The failure however was on some pretty critical points.

The amount of times we have said on here don't trust analysts and tip sheets etc.......................

That works both ways, conservative or bullish.

[uppompeii] 26/1/2014 00:27

Bocker, iof havent exactly called it right and they are the company!

[superg1] 25/1/2014 22:54

Bob

Don't expect an rns post 30th, a third factor, IOF give their details and the bureau want more, so a 'recess' for the extra info.

The only speedy event if it were to happen would be the issue of the permit if IOF cover everything they want

Anyone that thinks otherwise, needs to ask a few questions, and do a bit of research.

[bocker01] 25/1/2014 22:40

SG, imo the NUMIS note still contains material overstatements in cost of sales, overheads and understatements in selling prices and average ppms. The effect is fairly significant. However, what can you expect of a note that in January 2014 came up with two different cash flows for 2013, the first showing that capx of $6m had taken place and the second that capx of $11m had taken place. Let's face it, if the analysts cannot get statements of fact for the past right what hope have they with estimates of the future!

[superg1] 25/1/2014 22:36

If you are talking meeting going well and IOF satisfying the bureau re issues raised, then in theory, one would hope it doesn't take weeks.

We'll just have to wait and see what happens post meeting and if IOF comment on it, to give an idea re how it went.

I can't find anything to stop it being issued, everything I read suggests it will be awarded. Whether that be for 80k bpd or a smaller number.

I don't think for a minute that IOF don't have any buyers.

It would be a pretty tough call for the bureau to discriminate against IOF. For any aquifer extraction there could be a case, but not the Missouri.

Not forgetting of course that Montana has a number of closed basins, where no further rights are allowed, and IOF has water that could assist the state in the future. No one else has. IOF on that point, may well be unique in the US.

[mail2] 25/1/2014 22:23

careful guys. think all stocks will take a hit monday. USA down badly friday. troubles argentina / syria/ ukraine

[bobsworth] 25/1/2014 22:00

Superg1

Yet again big thanks for clarify "That meeting".

Assuming "that meeting" goes well and there is no legal route to cover what sort of timescales can we expect post the meeting to get a permit approval from the board?

Weeks or Months?

Also having mentioned North Dakota, what has happened to the application they made to North Dakota for water sales rights?

[superg1] 25/1/2014 21:51

Bocker

Numis clearly discount iodine on that prilled/crystal argument, an argument that seems to favour a mistake by them based on the info from industrial minerals.

So they have discounted the iodine price to account for crystal, but then state that if IOF go to prilling they would add 35p to 45p to the target price.

A discount it seems should never have happened. We are of course speculating based on their comment of 'market information' and what we glean from the iodine market meaning prices based on crystal, but the information tends to suggest they may be wrong.

They go on about the discount IOF would have to sell their iodine at, and infer that the $45-$50 price covers prilled iodine.

When in fact it seems no discount should have been applied, the 35 to 45p TP should have been added.

Another mystery, but overall irrelevant, as all that matters is how much iodine IOF produce and sell and how much revenue/profit, they make.



There is no mistake about io1 Numis reiterate that io1 is a low level production plant, so Io2 did most of that average .85 mt per day earlier in the year on 18.7 k bpd.

Now it has the brine to run at 30k bpd.

What does over 1 mt plus mean? because after that rns (io2 and 3), figures of 1.3mt to 1.6mt mt per day hit were being put about. I've no idea if they are true, and never asked anyone, but if they are, it would be nice to have been officially told about it, instead of 1mt plus.

[superg1] 25/1/2014 21:21

Bobby

Look up Select energy, that's what their business is all about.

The final point on water

The public notice period.

IOF said 30 days for that (one rns), but all the public notices I have seen give 45 days.

The location of the IOF depot would be 2 miles east of Culbertson which is about 23 miles west of the ND border. Population 700 ish.

Montana is 545 miles wide with 96% of Montana up stream from where IOF want their depot.

So there can't be many, if any, permit holders in Montana, that the permit would affect.

[bocker01] 25/1/2014 20:47

Thanks SG1 for that clarification and Che7win and Boggle for highlighting the issue. Well Numis assumed $19 a kilo margin. So I guess we must suppose that since Numis also inadvertently knocked $7.5 per kilo off the iodine selling price, they are way down on profit too. 40% or so. Presumably that reads across to their targetted share price which goes up by the reciprocal to over 2 quid. Sad thing is, this error has company, lots of company.... Must be some dark humour in all this somewhere. Damned if I can find it though!

[bobbyshilling] 25/1/2014 19:27

That's a full answer sg, thanks. So my (only) concern about the water application is unfounded. Good!