Iofina Share Discussion Threads

[che7win] 26/3/2014 07:56

When I asked The company a few weeks ago if they were more or less optimistic since I last spoke to them, their answer was:

"More optimistic, IOF is a great company with a good business model, low cost production and US customers that are interested in doing business with us".

On mobile units:
The plans were complete, probably will do a couple of mobiles, 3-4 month build time, capacity up to 10,000 bbd and 5000ppm sites available. Out to tender if I recall correctly.

They were confident of the business, an exciting business plan ahead.

The person I spoke to did mention wanting the share price to appreciate and quarter on quarter updates would show the rising production trend.

Io3 results were good, consistency day to day very good and numbers in line with what could be delivered.

They are on track for over 700 MT as per the broker notes. They mentioned most of the 700MT would be delivered in the second half.

They mentioned that even if iodine prices stayed around current levels in 2014, it was temporary and higher prices would return.

The GMP figures were well within bounds, I'm looking for 5-6p EPS this year and I discussed the broker notes at length. Say 5.5p as the expectation.

Chemical division: consumption between 300-400MT, high gross margins from internal iodine supply, around 50%.

They continue to optimise current plant design, no intention to do bigger plants right now.

The water application had plenty of interest, news expectations soon.

[superg1] 26/3/2014 07:44

Che

On the iodine price of the drop in price has been soaked up by the weak Chile peso as you know.

E.G

The margins for Chileans will have remained much the same on the 52 ish rate mentioned by SQM v the 40's mentioned recently.

The big customers would have applied pressure on prices knowing over the last year that the peso has weakened by 16% overall. It's been the same for Brazil and Argentina, although in recent times there is a sign of a turn in those countries.

Early days but interesting to keep an eye on how those currencies do over the coming months, if the up trend over the last year is broken.

Looking at market forecasts, they don't expect a peso price much higher than it is now, but that was pre this mini turn.

[che7win] 26/3/2014 06:45

Frog/bobsworth,
The company has never stated their cash position before outside of results, I don't see any other growth company having their cash position questioned and under pressure to declare what cash they have.

IOF can manage their capex accordingly, I don't see why they should have to rule out or in anything at this stage.

They should be able to make 700mt with the current plants they have, a couple of mobile units H2 also will make a material difference. There is zero growth priced in next year.

Why should any growing company rule out cash financing, I just think that is a bit too much to expect. They didn't do it with the Stena renegotiation so that to me indicates they won't raise cash through issuing shares.
They must be very confident that they can expand without issuing shares, I have already detailed several methods that were mentioned to me directly.

We are now sitting at a P/E of around 10-12 for this year on iodine production with hidden potential upside from water (say anything between £10m to £30m in a sale).
Oil assets also will be in play at some stage, so at this price the market upside is much higher than downside.

We know that iodine prices have been declared unsustainable below $50kg, they will bounce back as iodine inventory is sold off. The figures quoted to me from sources are $70kg in 18 months time, we probably won't remain independent to reap the profits.

Takeover at 150p is a hidden threat to shorters, if any of the Chileans or Japanese competitors are alert they have an opportunity now while sentiment is poor.

Q1 figures will be affected due to weather resulting in O&G freeze overs, out of company control, it was severe weather, now priced in.
They should state the production rate in the last month, that would interest me more.

The picture by end of year will be transformed by these new plants, a new management team / chairman and steadily rising quarterly production figures.

[frog1] 25/3/2014 23:03

Bobsworth

Great summary that I agree with. Just pushing out more info saying plants coming on line is not enough. The short term issue is how do they send the message about the finance. The promised quarterly production update is the logical time as it could be turned into an Intermediate Management Statement including an updated roll out plan with a statement saying the capital expenditure to meet the plan can be met from cash flow and current cash.

Panicky updates will not help without numbers. Once this hurdle is overcome, the quarterly updates will take care of things as long as they meet the plan and the share price will recover as revenues increase. It is necessary to ride out the storm until the update and I hope they keep their powder dry till then unless there is info that legally requires an RNS.

[cyfran101] 25/3/2014 22:49

It seems to me that at £2.50 investors were willing to believe everything (core and non core) was going to come off with no bumps in the road and therefore valued the company on results three years down the track.

Now that has retreated to nearer next years results with the current choppy waters.

If they can start to restore confidence then this will revalue accordingly.

[superg1] 25/3/2014 22:22

beeez

The only rumours I know of are the complete opposite of the chart, but the chart isn't an interest just the fundamentals.

I have a whole host of share on watch, some for 4/5 years, I keep watching thinking about a good entry point, some are 10 times less the price, so in theory at a good buy-in price, but no they are not as the business side of things hasn't moved on.

But then fundamentals can have very little to do with price action, the trend or herd interest/sentiment can move prices very quickly.

[superg1] 25/3/2014 22:14

So I look at chile

It says.

Costs rising.

Water rules pending that may force high capex and opex rises re production.

Mining taxes to rise.

100,000 student protest to remind the new prime minister re promises and what will happen if she doesn't.

Copper mine closed as workers effectively riot, and set trucks alight.

Recent ports strike.

SQM on the back foot have dumped mines and production due to high costs. Sirocco dumped the ALP due to high costs.

Water scarcity growing.

In Chile it's SNAFU, so what is there to worry about.

[beeezzz] 25/3/2014 22:11

SG.....Thanks...not much of a gloss just putting some perspective on what should be a good investment. The markets are not often wrong and somebody knows something and as PI's we'll be the last hear, maybe the Stena deal hasn't gone down that well in the City, and Iofina is loosing control of the company slowly but surely.

[che7win] 25/3/2014 21:31

Rockstar,
Good post.
I expect 90-110 MT production from the first three plants this quarter, mainly due to the severe weather shutting in some of the O&G wells as the company mentioned in January.

The weather would be more of a factor than brine supply, second quarter comparisons will be much better, not only because of the better weather, but because of a doubling of full production plants.

Quarter by quarter releases will show the growth.

The chemical division will have had a good quarter too, a good year ahead for it.

As I mentioned earlier, the time to raise extra cash was with the Stena loan reset, we didn't do it, so we will keep rolling out based on cashflow and some debt.

Expect most of production to be weighted to the second half, a 25/75% split.

[ammons] 25/3/2014 21:26

It could be that bad news (as perceived by the market) has leaked. That is the simplest explanation, sadly.

[bobsworth] 25/3/2014 21:23

Spot on Meadow2 and Bobby it will be interesting to see how they fund the water permit - hence talk of a Junior Partner etc. Dr. William D. Bellamy recent appointment with immediate effect bodes well for water rights being granted - maybe just what the DNRC wanted!!!???

[woodpeckers] 25/3/2014 21:13

Bob, couldn't agree more. I'm confident that this first 'proper' set of quarterly results will give us the clarification needed. We're all aware that the figures aren't going to blow us away, but I think they will show that this is a real turning point for the company.

Selling at this stage seems insane to me.

[meadow2] 25/3/2014 21:12

I presume that Iofina cannot be seen to be attempting to deliberately drive up the price of their own share. The only thing they can do is issue straight forward, factual RNS's or a notice to the effect that they know of no reasons why the share price has changed so dramatically. I await a factual RNS or two.

[bobbyshilling] 25/3/2014 21:06

Bobsworth, it could be that they are awaiting water permit, and therefore there is the possibility I suppose that they may need funds short term to fast track the depot build. They may not necessarily dilute for that requirement, but your logic in your post certainly sounds reasonable.

[woodpeckers] 25/3/2014 20:30

I'm not sure what has happened to change sentiment here.

Chris Fay is not far off 70 and lives in the UK. Is it surprising that having stepped in to cover for Lance this year, he has decided to call it a day now that he presumably feels there are others at the helm who are more conveniently placed to do the job. He was a buyer in December at £1.

Since then we have had rns' stating that the board are 'confident' on the water application. We have a new NED, whose C.V. couldn't be more appropriate to aid advancing that particular side of the business.

We know that IO4 is complete, 5 can't be far off and 6 looks pretty good in the photos. Weather may have held things up a bit over winter but we have spring and summer to look forward to.

January saw first external raw iodine sales and we were given confirmation that not only were sales going as planned but that "order activity is promising".

We have been told that we will receive quarterly production updates, the next one being due in the very near future.

So I'm either missing some terrible news that everyone else appears to have seen or am forced to think that the likes of the 'undesirables' on this thread are unbelievably managing to scare some people in to giving away their shares at what to me seem ridiculously cheap prices.

[jagsta386] 25/3/2014 19:41

Ennismore are obviously controlling this or have inside info. Look at the timings and increases of short. No other real large player has shorted. Unlike blinx with many large shorters. Been hearing from £2 that Ennismore will be doomed with news imminent. They knew everything from iofina meetings quite possibly.

[bryproj] 25/3/2014 19:33

This is now at a price that many dreamed of buying at only recently. Either there is a major issue internally or it is a buying opportunity that many may kick themselves in future months for not exploiting.

[microcline] 25/3/2014 19:20

Can anyone provide proof that IOF is a leaky stock?

[rock star] 25/3/2014 19:18

Just been reading the last few posts after the selloff of the last few days. Interesting the difference between now and a year ago when the shares were going up 10pc per day.

The company is very different from a year ago. A lot more advanced but a quarter of the share price. The AIM market is a fickle and imperfect market and so one has to identify the wood from the trees.

A couple of posts from above I would note. Agree with Square1.

Also CF can't sell any stock as he still is Chairman of the company and will be an insider until the results are announced. Anyway I doubt if he will. The biggest problem for CF was that of geography. He simply wasn't in the US enough to really know where the critical areas of attention were.

I doubt there are any immediate cash needs now the debt has been rolled over. I would have though if they needed any more Working Capital they probably could have tacked another $3m onto the Stena loan.

The important factor is producing iodine and generating cashflow. IO4 and 5 must be on the cusp of becoming operational. It only needs these 2 new plants to run at partial capacity to start building up the cash in the business after 18 months of CAPEX. The cost of operating a plant is low as demonstrated by IO1 which only produces 4t per month but is viable. As has been noted above Iodine production in Q1 isn't going to blow the lights out due to oil production being affected on the ML due to the adverse weather in Feb. Going into Q2 we should, even accounting for the usual slippage, see strong Q on Q increases and more importantly see the internal cash generation which will then fund the rollout of future plants later in the year.

The attraction when investing a couple of years ago was the margins they had for error in executing the business plan. With a 5 month delay since the May 2013 convertible was issued,as well as, a fall in the iodine price falling 15-20% it has meant the extension of the loan repayment and slow down of the rollout until they are getting consistent iodine production. The biggest risk here was managing the rollout around the cashflow. With a little help from the established chemicals division which has grown steadily over the last few years (and makes the majority of its annual sales in the first 4 months of the year)I feel very comfortable the have negotiated their way through the most difficult stage of their evolution.

Is this better value than when they were last 60p? I'll let others make their own decision.

[bobbyshilling] 25/3/2014 18:54

Trav5, yes, you are right - sorry, I missed that bit.