Iofina Share Discussion Threads

[che7win] 11/7/2014 11:33

Huttgl,
Early days as you say, but IOF iodine production growth is very impressive, albeit from a low base.

Growth year on year in the first quarter 2014 up 260% to 47mt.

First half production 2014 only 10% below what we produced in the whole of last year.

Growth first quarter to second quarter this year up 98%.

Average production this quarter around 35mt per month, those are impressive and record figures.

We have two new plants coming online, which is a 50% increase in full size plants.

The company at the AGM is targeting 150% growth these next two years, that's why I hold a record amount of shares now.

If I mentioned the growth figures above to most investors without naming the company along with the balance sheet and metrics, they would probably value this business at 125p IMHO.

Confidence will take time to return, but the fundamentals will take over.

Mr Big has it right, teething problems are normal in the early stage phases.

Then we have oil, gas, water....ok, I won't go there ;-)

[huttgl] 11/7/2014 11:20

If I was a 'large customer' I would not be inspired enough by IOFs track record so far to place much reliance on their ability to consistently supply large quantity and would not want to create a dependency on them until this ability is proven.
Their 'ability to expand quickly via their new pods' is unproven. has been a long time coming and isn't there yet, so I consider this a theoretical ability until they actually do it.

[bogg1e] 11/7/2014 10:45

Although I'm pleased to see large customers in the background for long term supply, i hope for now the customers do not ask for something that is risky for IOF to deliver, eg 500 tonnes per year. I wouldn't want to see IOF forced to make up shortfalls in iodine supply from inventory required for IOC. I think even with 3 or 4 minis in place, to agree to more than 10 tonnes per month could be risky, ie only agree to what they know they can easily fulfill.

[bobsworth] 11/7/2014 10:39

Sg the current pull back on production by the Chilean producers must be seen now as an early warning to iodine buyers that these Chilean producers can no longer guarantee a long term supply of iodine. With rising costs that they are unable to control, apart from SQM who have lithium aswell, all the Chilean producers must be viewed now at high risk of stopping production altogether.

As guaranteed supplies are essential for the iodine market this probably explains why Iofina, as a new supplier of iodine and one with a growing derivatives business (low risk), is now seeing a strong interest from iodine customers for guaranteed long term supply.

With excess iodine coming on line soon plus their ability to expand quickly via their new pods, I guess it's now just a case of Iofina agreeing on a hedging price that suits both parties.

With an expected rise in the price of iodine, I suspect too that they will not want to commit all of their new excess production to these long term supply agreements! That way they get the best of both markets - stability from the long term agreements and high margins from the open market.

[superg1] 11/7/2014 07:41

There was that recent comment that all but one of the Chilean producers had pulled back on production. The one would have been Cosayach, but that was pre the water theft case.

RB energy (Sirocco) as we know abandoned their ALP which was too high on cost, they clearly won't be going back to that in a hurry, so are stuck on lower production.

We know SQM have closed their El Toco mine at Maria Elena, and Iris plant at Neuve Victoria.

We know Algorta Norte were practically maxed out in production as they are limited by the amount of seawater they are pumping. They would need another pipeline to add any material amount. That will not be attractive looking at their costs.

SCM Bullmine are said to have the highest costs of all and it was suggested at the AGM that they have pulled back or stopped producing.

Cosayach as we know got hit in court re their Negreiros and Cala Cala production areas. The recent failed SQM cases relate to the EIA at Soledad and the seawater pipeline EIA in an area further north.

SQM talk of the lower prices, but is that waffle as they clearly stated in conference calls prior to all of this that they were going into long term contracts.

Cosayach have clearly been the fly in the ointment on price cutting but they had that crooked advantage of stealing fresh water, which has now gone.

[freshvoice] 10/7/2014 23:17

I see Nutters has the verbal trots again! LOL

Is he trying formost filtered posts in a day or what?

[che7win] 10/7/2014 21:33

Superg,
Nice post.

I wonder if Algorta's costs include the replacement element? As they mine, they have to keep investing in replacement costs.

Only so long the Chile miners can cut their expenditure before they have to start reinvesting.

Also, there's not much point in running a mine at break even or close to it. Reminds me of the oil cartels cutting back on production to protect margins.

I would say things may swing very quickly the other way, as prices fall, none of the miners will want to enter into long term contracts at fixed prices. So what should a company like Algorta do? As you say once inventories are sold, some maybe at distressed prices to cover wafer thin margins, then the iodine price should bounce quickly. Suppliers will not tie into low prices.

The market is so short sighted sometimes, this is where investors can get ahead of the curve IMHO.

[n3tleylucas] 10/7/2014 21:15

Bulky posts mate, but this is now going to fall ;)

[superg1] 10/7/2014 21:12

Che


There is a whole host of comments in Chile mining about the cost implication of the use of seawater. Many of the bigger mines went that way, and quote the costs being 20% to 30% of overall costs.

Bhp Billiton talk of $3.4 billion of spending by them on desalination.

The actual media comment talks of the mandatory use of desalinated seawater, we'll have to wait and see if that becomes fact or they mean just raw seawater for some.

The only figures we have in recent times is Algorta for H1 13

"In this period the company had revenues of U.S. $ 56.2 million and an operating cost of $ 38.8 million"

Iodine was over $55 per kg in that period so $56 mill equates to around 1000mt

At $50 it would have been around 1100 mt giving a cost of between $35 to $38.80 per kg. We know Algorta use seawater.

RB (sirocco) forecast $29 per kg using freshwater. $29 adding on the industry 20 to 30% comments gives $34.8 to $37.7 per kg. That pretty much fits what the Algorta cost appears to be, so it seems to be a fair guide.

Indmin and others keep going on about the over-supply, and 3% per year growth.

Personally I'm thinking it's a case of the pendulum being swung too far on the high prices in terms of increased production. But now the pull backs seem to be far greater than the actual demand should be when the dust settles.

In theory the last few years demand increases will wipe out the balance of what algorta have contributed, so that leaves Cosayach, SQM and Sirocco who combined have dropped 4000 to 5000 from the market in the same period.

The flurry of extra supply came in during 2013, and now prices are low in 2014. The cutting back off re supply happened in late 2013 and should in theory hit once inventories empty to meet any demand.

Hence I think Q1 2015 should see a bit of a shortage and price pressure.

As the price went up some sectors were lost, like animal related disinfection. But iodine related disinfection is the A standard and demand comes back when the price drops, which then pushes up demand and the cycle starts again.

SCM bullmine were said to have the highest costs of all, so I imagine they are loss making, but there was a recent suggestion they have stopped producing.

[n3tleylucas] 10/7/2014 21:03

...or his bearish view? LOL

Where's his next buys? ;)

[n3tleylucas] 10/7/2014 21:02

...or didn't you notice the dip below 50? LOL

[n3tleylucas] 10/7/2014 21:00

The key point is Arron has gone on holiday mate.

[cyberbub] 10/7/2014 20:58

Yes quite possible the low India price quoted was based on some contractual terms, or larger quantity or whatever.The key point is that it would have to go below $30 for IOF to start becoming unprofitable... is that really likely??NAI

[n3tleylucas] 10/7/2014 20:52

Cheggers,

You do know this isn't real?

[che7win] 10/7/2014 20:30

Superg,
Yes, your research into Chile all seems to be coming together nicely, a bit more patience and we may hear more throttling back in Chile.

Things seems to on the up for IOF, I'm a lot happier than I was a few months ago, this is such a silly price.

Copper prices are trending up from March too, as are most commodities, but copper is intetresting for Chile exchange rates:

[superg1] 10/7/2014 20:00

Another point is the recently quoted contract price (37-40) v the spot price (38-45) which may explain the India variations and the IOF mentioned price.

[superg1] 10/7/2014 19:43

Che

The selling price IOF quoted they sold at was $42 per kg. It is known that Cosayach were selling cheaply and now we know they were stealing water from wells at very little cost.

I assume the $42 per kg sales would be into the US. Although the US could import form Chile the shipping costs would be higher, then of course there is the US import duty too. Thus it makes it very useful long term that the US imports about 5500-6000mt.

Chile strikes will continue over the years, it's one thing you can rely on.

Clearly some end users have had bad experiences with the quality of some Chile iodine in recent times as it's been commented on in the media on more than one occasion.... once bitten etc.

How are Algorta doing right now as they are probably the number 2 in Chile, but their apparent costs seem to be the same as the current sell price, so it is no easy ride for them.

SQM seem to have been going for efficiencies and maybe even want low prices as they know it could finish off some other Chile competitors.

The Sirocco ALP last opex ($41 per kg) was above this current price so they will be in no hurry to want that back. Their lower rate production heap leach method is forecast to be $29 per kg.

For all we know the cheaper India iodine could be the poor quality stuff mentioned in reports.

At the AGM it was said one US company got hit with some, and won't be going back to the Chile supplier again.

[che7win] 10/7/2014 18:53

Netley,
You've been very naughty on MSMN today, you're also making very poor headway on OEX.

Ask when you're sober.

[n3tleylucas] 10/7/2014 18:38

Cheggers,

What do you predict this will make ptp '14 & 15?

[che7win] 10/7/2014 18:35

Engelo,
I believe zauba prices have rebate components, not entirely accurate.

It's only useful for the trend, did you not note the comment in yesterday's RNS that prices for iodine were stable in June? That is one of the things I requested the company comment on officially if possible, as I am off the opinion that prices are stable.

So I'm glad the company made comment on stable prices.

Back to Zauba, it's best to look at iodine 99.5.

Figures I have:
June: 37.37
July: 38.66

Prices look to be more or less stable since March:
March: 38.97
April: 39.08
May: 38.29

Not much fluctuation, definitely looks like commodities in general are trending up, iodine also looks at the bottom, so good for H2.

Not that it matters much to us for now, we will not have much excess until the Autumn to sell.

[engelo] 10/7/2014 18:08

LOL mm3. Links back to cyber's post: what's a genuine holder? On here they have visible wounds, tics and mannerisms and are convinced they are the only ones who can see things straight. Oh and they've lost their shirts, too :-)

[monkeymagic3] 10/7/2014 18:01

Pi's getting MORE desperate.