Iofina Share Discussion Threads

[che7win] 18/10/2014 09:47

A JV derisks the water.

Project financing, ring fenced on the water division could be an option on the back of projected profits, but I think it's a step too far at this stage.

Best to bring in a partner or partners, there should be multiple partners interested, so we can extract a decent deal. I know there was a lot of interest back in March.

[superg1] 18/10/2014 09:15

Water

As stated before the vast majority of water permits are for aquifers and tributaries. As shown in a recent post the only long term reliable water source is the Missouri. In the case of Halliburton they quote that point and they see issues on the horizon for aquifer related permits.

A JV would allow any interested party to reduce their completion costs, but in the case of an oil services company it would allow them to increase their margins.

Halliburton are simply thinking ahead avoiding the inevitable withdrawal of many exiting emergency temporary permits, and restrictions on aquifer withdrawal.

The recent emergency measures have been down to servicing the oil industry as the infrastructure to supply water simply isn't there.

Some have already be fined $800k and $600k for going beyond their permit limits.

[naphar] 18/10/2014 09:09

Summary
For me, another valid scenario would be: JV water, repay Stena bond with up front payment, use some of cash at bank to rollout and test one or two minis and maybe build IO7, get everything bedded in and proven, then use cash being thrown off by iodine and water side to start a manageable iodine expansion plan.

Rambling thoughts that got me there

Bobby
I agree, I think going it alone on the water is a viable and more profitable option, that was not discounted in the rns.
I also agree with 1MM that the project specific funding option may have been an ultimatum to potential JV partners.

I don't see that selling water can be that difficult, after all, farmers are selling their irrigation water, presumably with no prior expertise in the field. The technical blueprint has been signed off, the depot just needs building. Build it when the potential customers who signed letters of intent have signed supply agreements and are therefore assured, as far as possible, of becoming customers.

All that said, we also need to allow the BoD to judge the risks involved, as well as the (potential but not assured) financial benefit of being able to ramp up iodine output a bit more quickly with a JV than by going it alone. I personally don't see the financial benefit of a JV being too great, unless the board want to use an up front to repay the Stena loan (more of an option than the AB loan at current share price).

I don't believe Bosworth scenario is likely. I can't see us expanding iodine sites that rapidly, not until the minis have been proven in the field. Get the water depot up and running, and you can probably fund a mini or two per month with the cash flow, even as a JV, once they have been proven to be viable. That would be a more manageable, less risky, form of expansion imo. It would also de-risk the balance sheet somewhat.

[1madmarky] 18/10/2014 07:27

I my opinion, the specific funding comment was in there to suggest to potential JV partners that a JV is not the only option for us. So stop messing about and get your cheque books out! :-)

GLA

[arlington chetwynd talbot] 18/10/2014 00:39

That's true, and we'll see what happens.

[bobbyshilling] 18/10/2014 00:28

There are ways of raising the required funding, if not through a JV.

Water is big bucks to IOF.

[arlington chetwynd talbot] 18/10/2014 00:27

Also we would not have been granted (the preliminary) permit if it was thought that IOF could not accomplish the task.

See my post above.

[arlington chetwynd talbot] 18/10/2014 00:26

You are not well capitalised enough to do water.

There is a reason you won't fund this.

[bobbyshilling] 18/10/2014 00:25

I am not so convinced that it is such a big problem to get the water extraction up and running. There are many companies extracting water for fracking use, so why is it so difficult? Also we would not have been granted (the preliminary) permit if it was thought that IOF could not accomplish the task.

There are experienced specialist companies in the water field to call on now in the area, because they have already carried out the setting up tasks for others. It is the finance that is the main issue towards getting the project up and running.

I'm not looking to cause disruption against any of the valid posts here which have a different angle on this, just bringing an alternative to the table. As has been said already, we are now in a great position as a company, no matter which way this unfolds.

[monts12] 18/10/2014 00:19

Bobby it's been a roller coaster but now we are in a better position than ever, why not take a JV and use the money to increase iodine production rapidly? It's a no brainer. The share price will be dragged up as we throw off cash from ramped up production.

[simmy1699] 18/10/2014 00:18

Bobby having one water guy on the board does not mean experience. We have more iodine related guys as board members but we've not taken the world by storm on the iodine related front either. Besides, I think this BOD is reasonably transparent (hence the monthly updates and CEO interviews) so I don't think they'll sway from what they've said eg "just joking". You'll appreciate they would have weighed up this JV route probably 2years ago when they started this water permit journey so I don't think this is something still up in the air - they've had ages to think about it and budget for it. It surprises me that PIs sometimes ignore the BOD statements (and I appreciate you are not ignoring !) - LOND directors said the company was struggling, PIs dived in as share price boomed and the company went into admin!Sg mentioned winter reduces fracking activity. Presumably this does not impact brine levels if what he says above is applicable (post 26108). So if less fracking, this is beneficial to IOF, why would these guys move back to quarterly updates? Surely they are to perform well?And am I missing something here then ? What use is fracking apart from them being potential customers for water.

[engelo] 18/10/2014 00:12

Bobsworth have always enjoyed your upbeat posts: we've needed them over the months and still do for another few weeks until the Autumn statement. A pleasure to read and can't see any trace of exaggeration.

Eg there is more to the water division than the (almost) permitted water depots. And there's more to IOF than iodine and water :-)

Thanks again to Superg for the high quality research and reporting on the complexities of the water business. As a result we know far more than the mkt imo, who haven't got time to read the information handed on a plate by this thread ;-)

[bobbyshilling] 18/10/2014 00:10

monts, fair comment, after all we are all getting older. I too don't want this company to come good as I am about to keel over!

[monts12] 18/10/2014 00:06

Bobby
Not going to happen. It has been stated very clearly by the BOD in past investor presentations and at the last AGM that water would be either partly or completely hived off for the right price. Water has always been said to be non core and that's what is emphasised in the majority of RNSs when it's mentioned.

Although I agree that there would be much greater value in realising the full potential of water ourselves, it would take a LOT of time and money. I don't want to wait x more years for that potential to be realised & have my holding diluted to raise the necessary funds and neither, I think, do the BOD.
All IMO.

[bobbyshilling] 18/10/2014 00:05

Bogg1e, this is from the rns of 6th Oct:-

"The Company will not fund this non-core water project with the current Iofina cash on hand but instead seek a joint venture partner or specific project financing exclusively within Atlantis Water Solutions".

Note: 'specific project financing'

Nothing is certain about a JV, but agree that they seemed to perceive it as the best route at the time of the rns.

[bogg1e] 17/10/2014 23:58

bobby, we were told in the latest update that a JV is perceived by the BoD as the best route.

[bobbyshilling] 17/10/2014 23:56

simmy,

IOF have some real water expertise on the board - that is why I think they can go it alone. They are not just going to sit with just six plants - we are told of their plans to expand using mobile units. You might be correct about a JV, they did mention it too in a recent rns - but it was only mentioned as a way forward - not confirmed as you suggest.

We will have to trust the board on this at the end of the day; they have the figures in front of them, so I reckon we need to trust their judgement as to the best way forward to create share holder value. I was only expressing an alternative view from a JV - and that view may yet come to pass.

[simmy1699] 17/10/2014 23:45

BobbyI've said before- these guys have barely gotten to grips with what their core business is. What makes you think that one guy on the board can get the co. to grips on the water? It just doesn't make sense. The plants are working now and it's silly if they just sit with 6. My bet is the JV. I don't know how $15m has been plucked out but whatever we get will be thrown towards expansion. Besides, it's too late really. The co. has confirmed it's not gonna do this on its own. Praise The Lord.

[arlington chetwynd talbot] 17/10/2014 23:40

Hey che, this is making nowt in a boom... why not drill for oil?

[che7win] 17/10/2014 23:38

Bob,
Your thinking ahead, so am I.

Everything you say is possible, iodine prices rising will multiply the effect.

The water is a means to an end for me, real value is iodine with our high moat.

[arlington chetwynd talbot] 17/10/2014 23:37

If Graham is agin it it's a good thing... is what you're really saying. Be brave bud, don't hide behind my skirts.

[bobbyshilling] 17/10/2014 23:29

If ACT is against it, then it must be a good thing.

[arlington chetwynd talbot] 17/10/2014 23:20

Look mate, even Saint Graham of Rampton knows a JV is the only way... why are you fighting the fool? When he's actually right, for once?

[bobbyshilling] 17/10/2014 23:16

Bobsworth, IOF appointed a new director in March, Dr William Bellamy, who is very experienced in water. I can't understand why IOF should want to employ external expertise from a JV partner when we probably have one of the best men on board already to guide the company in this aspect of it's business - or why bring him on board in the first place?

I have said previously that I would like IOF to go it alone with regards to water; OK we will need to raise cash, but a placing at 40p would give us the cash,(but not too much dilution when one considers what is at stake here for the medium term), but importantly we will have 100% of everything tied into the water side of the business - no matter what happens to the price of iodine in the meantime, and the (significant) money we make will help us going forward with everything the company plans. Granted it will take longer, but what a company, with both iodine and the very significant water side of the business going forward! Also the water business will provide a hedge against any fluctuation in iodine prices in the future.