Iofina Share Discussion Threads

[square1] 15/9/2014 07:16

I said last week that I expected Aug figs with Interims and I stand by that. Companies aren't run for short term news flows and this obsession with a monthly figure highlights the need to move to quarterly production updates.

[wizard2020] 15/9/2014 07:11

Should I be surprised that there is no Aug production update posted this morning?

[che7win] 15/9/2014 07:05

Engelo,
My view is a takeover of a derivatives company would be complimentary, those customers wouldn't transfer easily to us.

[kattatogaru] 14/9/2014 23:45

eng: I'll be enjoying my theoretical gains on my theoretical yacht with a bevy of theoretical beauties tonight! I'm on a boat!

[engelo] 14/9/2014 23:01

crosseyed: they can't know exactly, but knowing the price movement over the 20 days and whether expected news has arrived or not they can get an indication. Also knowing the number of T20s outstanding when news comes out will help MMs as many T traders will get out on principle whether news is good or bad.

Very tempting to take out a T trade right now at 57 to cover all the news that's due in the next 10 trading days, but IOF have fogged things up with their RNS tactics so think I'll keep it to a theoretical £10k and watch what happens :-). Knowing my luck the results will be better than expected, production figs will be as forecast and water will come in, too :-)

I used to be a big (for me) punter once a year on the Grand National. Then I had the idea of taking the same trouble but making the bets theoretical. Been doing well ever since and enjoy the race just as much :-)

[crosseyed] 14/9/2014 21:35

superg,

How do the MMs know that T20 traders will be forced to sell? They might roll or even buy :}

c

[superg1] 14/9/2014 18:34

Kat


I know plenty here look on and have little knowledge of the trading world (me included).

The T trade comments were to identify why some 'sell'. I've noted many time on various shares that some say, 'why would anyone sell on that news'.

The 'sell' has to happen as they don't have the cash to own them outright, the loan period will end, so best to sell at the price they think is highest, or a profit/ at any price.

Just like stop losses I'm sure the MMs are aware of the sell by date for T trades. Small trades are probably not of interest, but the larger ones would be.

EG if on any 1 or 2 days you know 100k to 150k shares have to close, get off the bid, and let the price drop to pick them up knowing they are going to be forced to sell.

[engelo] 14/9/2014 11:46

Che: been much talk of T/O s over the months, but where we are the 'victim'.

Once or twice I have raised the q 'why not T/O ioditech'? which hasn't generated much interest....yet. Presumably their business is viable but suffering long term from reduced brine availability and quality.

We would pick up a reasonable customer list, working plant/processes to make some additional derivatives, and a simple destination for surplus iodine, at least.

Answering the question, (a) the time is not right to be spending money, (b) the customers may transfer in time if we do absolutely nothing.

Any thoughts?

PS just noticed Bogg1e's post 24376 and these ideas are complementary imo.

[midford] 13/9/2014 20:29

I owe dinero i mucho gente

[kattatogaru] 13/9/2014 20:04

Thanks Superg for that clear explanation on T-trades. Am definitely not in the category of PIs who can spend time tracking every trade. IOF is a weird case where PI interest (and comment volume) if completely out of proportion to the information available... tempting one to trade too frequently. I guess I stick with the fundamentals analysis and long-term outlook. Hasn't done me any harm yet.

[bogg1e] 13/9/2014 15:12

I thought the plan was to put basic derivative manufacturing capacity at each IO plant? Thats what i have in my notes from agm feedback anyway.

As for competition, i think all we have to do is grow organically and we shall naturally monopolise both iodine production and iodine derivative production without having to cut prices etc. If we get a takeoff agreement with the japs then we can expand at a faster pace than organic growth, thats what i want to hear at the agm, for now its more important than a new plant or minis. How many tonnes per year does mitsubishi etc require? Must be hundreds surely? Does anyone know? Tia.

[joestalin] 13/9/2014 11:11

Just a thought, - but would getting a farm-in partner to spud the Bakken acreage be a good idea to kick start the share price?
At this current share price level, it must eventually attract a predator.

[che7win] 13/9/2014 08:22

Note Toyotas iodine case study, may give understanding on how IOF will play out in any deal making strategy in the future:



Note also the production at affiliates iodide process takes place in the USA...IOF would make a great add on...

MadMarky,
Yes, we are a player, maybe August/September production figures are eagerly awaited.....by our rivals, they are watching our every move, so the company need to be wary what is given out on how we are doing.

I've also considered your point about value add at the plants, it is an interesting angle.

If I were IOF right now, pending a strong share price, I would be looking to add a derivatives bolt on to the business....like



You may just find that a similar angle has been looked at in the past...

[1madmarky] 13/9/2014 08:16

Che7win - the fact we make it into such a report means we have very much arrived. Just need to get production consistent ;-)

[1madmarky] 13/9/2014 08:14

The talk of an additional shift at IOC has been mentioned a fair bit but that would of course increase costs due to shift pay. What has not been mentioned so much is what they can do at the IO plants themselves. I am certainly no chemist but there must be relatively simple derivatives that can be produced at the plants as we already have the staff there. This would give us a little value added on the production side. I'm hoping that this is where Tom comes. Seeing the company as a whole instead of a resource side and a derivatives side. Just my thoughts. GLA

[che7win] 13/9/2014 08:10

Happy reading:



Just look how much iodine the US imports, mostly from Chile.

Superg,
He will return every time if he can make a buck, he will also try to copy you and find out how you can sell so cheap, our patents and leases sort that out.

I think we have a number of ice cream rivals, some of which are worried but will struggle on for a while with their ice cream inventory.
Some might be miffed at us and buy us out, some might drop the price to see how far the others can be pushed.
Lidls has taken the fight to Tesco, if they weren't a private company they probably would have been taken out years ago. The French chain Carrefour a few years ago is where Tesco is now.
The only outcome for supermarkets is permanently lower margins, competition is cut throat.
Lidos saw a big fat industry with decent margins and brought a new model in that is destroying the big players, we are in a similar situation.

We have a model that is completely different to Chile, the key being someone else is expending capital on the wells for us whereas Chile has to keep replenishing their mines. We can undercut rivals and make profits far below them, but we are listed and can be taken out anytime.

When we get to 40 plants, that is the time we would happily cut margins and take rivals out, not now. The difference between Lidl and us is we don't have enough capital to fight and grow at the same time, fat margins now would let us grow organically and and a decent pace.

Our share price goes down from here and it's just a matter of time before someone takes us out on the cheap before we become dangerous.

[superg1] 13/9/2014 07:43

Thinking about derivatives the fact Iof have low iodine supply costs probably gives them a big advantage in that sector.

EG US end users buying at 37/38 per kg for their needs, but IOF producing in the 20's with a plan for high teens. It's a big difference in the costs of the raw material.

I think they said with the addition of shifts they could process about 800mt through the chem div.

I know my thoughts are nuts, but if I have a rival ice cream seller taking half my revenue and I can go to a price he where he loses money, and I'm still making a profit, then I will eventually end up better off, as he has to fold. Then I can up my price and he knows what will happen if he returns.

[che7win] 13/9/2014 07:38

The most likely competitors to take us out below?

Chapter Seven Iodine Key Manufacturers Analysis
7.1 Nippoh Chemicals
　
7.2 Iofina
　
7.3 Mitsui
　　
7.4 Ajay-SQM
　　
7.5 Toyota Tsusho

7.6 Godo Shigen Sangyo
　
7.7 Ise Chemicals

7.8 Atacama Minerals Chile
　
7.9 Sirocco Mining
　　
7.10 Sociedad Quimica Y Minera de Chile

[che7win] 12/9/2014 23:29

Superg,
That's reassuring, I was told that too (but by previous management), but also the savvy customers bit.

[superg1] 12/9/2014 23:21

Che

If it does help I did ask about derivative prices, and it seems they are largely unaffected in such price moves.

As someone pointed out certain products are unique or have very limited suppliers, so there is very little competition in some areas.

[che7win] 12/9/2014 22:30

It does sound nuts.

I think a lower iodine price is not good for anyone in the industry, including IOF when we need to grow.

A lot of the reasons why we are where we are now is because iodine has fallen.

It hurts us as well as others.

Some reasons why I want the iodine price to rise:

1. If the iodine price were $50, we could be producing 50% more profit using crude $20 costs and $40 selling price for excess inventory.

2. The share price would be rated much higher, as an example 8p EPS would become 12p EPS, P/E of 20, share price goes from 160p to 240p (don't read into the figures).

3. We wouldn't be vulnerable to a cheap takeover as we would be rated higher. A fall will destroy everyone's margins, anyone here want to see a falling share price in parallel to a falling iodine price?

4. We wouldn't be in an awkward position with any potential tie up with a joint venture partner. At our current price, the dilution would be unwelcome.
I don't want any equity deal done below 100p if we do go with a JV.

5. We would be more likely to avoid excessive dilution deals like the last convertible loan. I view it as very generous, but understandable at the time.

6. In any business area, if there are high margins, competition will ALWAYS come in and grab profits until that margin becomes more realistic. That's the nature of competition.
Just look at Apple vs Samsung, Boeing vs Airbus, Tesco vs Lidl etc.
If iodine ever gets back to $70, of course competition will come on stream and supply will increase, a sustainable price will always work it's way into the equation.
We are the Samsung of the iodine world, we have as good as or better product at a better price, but we can't destroy the incumbents without being allowed to grow, just as Lidl/Aldi after many years is only now getting to 7-8% market share and hurting Tesco hard.
How will Tesco combat Lidl? They can't, they have cut their dividend, but they have sunk capex in largely irrelevant hyper stores (much too large when internet shopping was the future). They took their eye off ROCE, wasting money in ventures such as Fresh&Easy in California etc, a bit like the Japs going to Chile, it wasn't the right place.
We need a higher price now to produce profits and reinvest in growth before we are at the position that Lidl is at. Let's grow quietly until one day we get to a position where we have the plants to destroy the largest producer, but we need the margins now for that to reinvest.

The lower iodine price has delayed the point where we became cash flow positive which I believe happened in Spring.

7. I believe there are a lot of competitors suffering, some are trying to hang on, some may be surviving on inventory. I would rather the iodine price stays were it is rather than any further falls, in time the low price will do its job in curtailing supply.

8. It affects our margins on the derivatives side.
We have some savvy end customers who are in touch with iodine prices, some will demand reductions in price.

9. If we sign a supply agreement deal, do we really want a contract deal at e.g $40?

[woodpeckers] 12/9/2014 21:35

"My ideal scenario is a backer taking a JV with IOF near term with rapid expansion keeping the price low or taking it lower. Once Chile players fold, the price will rebound, but there will be no way back for them."

With you there.

[superg1] 12/9/2014 20:47

Well you know my thoughts on RB the VP was a bit miffed in an email when I suggested they would have to close there ALP down and their ball mill plan was pointless as it would up the opex, hmmmmmmm. All on hold now, but now they will do it in 2015, yeah right, the last opex reported on that was $41 per kg. If you look at the pictures of it in their August presentation, the ALP looks huge and power hungry which explains the opex.

This may sound nuts for an investor but in some ways I hope the price drops lower for 6 months or so. SQM did say they can manage down to 30.

My reasoning for that is it would probably end up with the complete shut down of some mines and some businesses. Iof can cope with those prices, while it's not hugely attractive in terms of profits, in the long term it opens the door to expand.

If you imagine a price swing to 60 plus near term, then all the Chile players are off the hook and they could expand. That's the last thing I want, $60 plus is great but that price needs to arrive after some go bust, not before.

My ideal scenario is a backer taking a JV with IOF near term with rapid expansion keeping the price low or taking it lower. Once Chile players fold, the price will rebound, but there will be no way back for them.

We can all dream, it's probably not the dream of many, but the whole over-supply problem came from high costs mines able to expand. Now they are down, it needs someone to put a foot on their throat, and increase the pressure at a rate they see fit, imo. There has never been a better time to do it.

The same can be seen in the gold sector in terms of high costs mines. There are dozens now with forecast opex way over the price of gold.

[woodpeckers] 12/9/2014 19:11

super, not terribly clever 'trickery' posting differing figures in the same update, just makes them look incompetent. Can't imagine many will be fooled, but I guess they are pretty desperate!

[cyberbub] 12/9/2014 18:44

Agreed Bogg1e, news is overdue on several fronts.