Iofina Share Discussion Threads

[freshvoicem] 19/10/2014 21:50

Evening Nutters, had a good rest?
Sobered up for once?

[arlington chetwynd talbot] 19/10/2014 21:37

Yes, I guess so. More a UKIP issue than IOF eh? Ah well, it'll all blow over...

[stevo2011] 19/10/2014 21:31

In answer to your question - no I didn't click on the link - has no relevance , everyone has skeletons in ones closer whether true or false.either way I don't care.

[arlington chetwynd talbot] 19/10/2014 21:25

What I'm asking you is, do you find it interesting enough to click the link and read the article?

[arlington chetwynd talbot] 19/10/2014 21:23

Oh I'm not judging anyone, merely posting a rather interesting article.

Do you find it interesting?

[stevo2011] 19/10/2014 21:09

Is that the best you can come up with LOL

[sancler] 19/10/2014 13:02

Naphar: re 26157

The comment about 206 days related to how long it would take the output pumps to dispense the permitted amount.

The bit about input was from the start of para.39 "Original Finding of Fact 39 errs in failing to account for the storage capacity of the project (10.74 AF or approximately 3.5 million gallons) and in assuming that filing trucks would be timed such that the river pump would pump continuously."

Although that can be read as implying that it was an error to assume that "the river pump would pump continuously" the figures (outlined below) show that it has to do just that.

The combined capacity of the three input pumps is higher (at 2340 US gallons per minute = 0.1476306 cubic metres per second) than the stated flowrate of 5 CFS = 0.14158425 cubic metres per second. So, physically, it would be possible for pumping in to be discontinuous. But the 5 CFS is given as a maximum flow rate, not an average one.

3622 Acrefeet
Multiply by 325851 to get US Gallons = 1180232322
Multiply by 3.7854 to get Litres = 4467651432
Divide by 1000 to get cubic metres = 4467651.432

5 cubic feet per second
Multiply by 0.02831685 to get cubic metres per second = 0.14158425
multiply by 60 to get cubic metres per minute = 8.495055
Multiply by 60 to get cubic metres per hour = 509.7033
Multiply by 24 to get cubic metres per day = 12232.8792
Multiply by 365 to get cubic metres per year = 4465000.908

[engelo] 19/10/2014 12:12

henry9th: welcome :-). Ioditech will have a good customer list and there is always a resistance to customers changing suppliers.

They must see IOF as a big threat as IOF's iodine sources are cheap and limitless, so imo they could be stuffed over time by normal competitive attrition.

Re fracking I was astonished by SG's recent advice that the wells have a 30 year lifetime, so 29 years to go for many of them :-)

IN any case it's been pointed out recently that if all fracking stopped tomorrow IOF would not be greatly affected as they have many SWD resources available.

[henry9th1] 19/10/2014 10:37

This is an interesting share that has been on my peripheral vision for some time, I have bought a few and will buy more when the timing is right for me.

An interesting board, too much information some times, but interesting all the same. The bull is saying don't buy, wait for everything to develop, and the bear is trying to get the price down waiting to buy, so both are in agreement there!

The debt here is minimal compared to a lot of AIM companies and I do like the tight purse strings that the chairman is keeping his eye on, I can also understand them keeping the AB loan as a contingency.

The game changer for me will be if Hal do actually buy in to the water, that will certainly help the roll out and move the company into a decent bottom line and help the derivatives and IOC.

When and if that happens one would suspect that growth by acquisition will begin on the derivatives side, Ioditech or does SQM have something that they want to get rid of?

All in all the water business will be pivotal to the company should there be JV interest. If not then the Japanese offtake agreement becomes a poor second option believe it or not!

Will fracking slow down? To the contrary I think not, it will increase for economic reasons I hope Chesapeake don't overdo it!

[bobsworth] 19/10/2014 10:09

Further to sg’s post 26161
Note: SQM iodine mine (Nueve Victoria) that produces over 70% of their iodine output lies in the drought stricken North Region just south of Atacama that has seen a 50% rainfall deficit & 80% snowfall deficit this season.
- Surprised SQM investors are not upto speed on the implications of this drought on their iodine business because papers are full of stories about this drought!
………;……̷0;……R30;……230;…
Water shortage deepens in central and northern Chile

By Business News Americas staff reporter - Friday, September 26, 2014
Chile's water resources will grow scarcer in 2014-15, following below average rain and snowfall in central and northern regions.
"The past five years have been one of the driest periods in the last 100 years," water department director Carlos Estévez said.
"The water situation is normal in the south, but quite serious in northern and central Chile," public works undersecretary Sergio Galilea said.
The country's northern and central regions, spanning between Atacama (III) and O'Higgins (VI), have experienced a 50% rainfall deficit and an 80% snowfall deficit for the season. Rainfall is a major source of water supply into the area's rivers and reservoirs, apart from snow and glacier melt.
El Yeso, a major source of drinking water for Santiago's metropolitan area, saw water reserves decline 31% in August compared to the same year-ago month, and is currently at 58% of its capacity.
Galilea said the reservoir contains enough water to meet residential demand.
In Atacama and Coquimbo regions (IV), however, the situation is more critical, as water resources are insufficient to cover a growing demand.
Galilea also said the government is considering a range of measures, including drilling deeper wells and redistributing water, to maintain water irrigation needs for farmers.
President Michelle Bachelet is about to send to congress a bill that would limit water rights and extend government authority to regulate the sector, claiming the current system has led to misuse and mismanagement of water resources.
………;……̷0;……R30;……230;……………………………;……̷0;……R30;….
Chile introduces new changes to water code

By Business News Americas staff reporter - Thursday, October 9, 2014
Chilean President Michelle Bachelet's administration introduced amendments to the nation's water code before the lower house of congress in order to make human consumption and sanitation a priority.
The amendments would make it possible to limit water rights temporarily under special circumstances, such as a drought, according to a public works ministry (MOP) release.
It also states that water rights cannot be granted for resources within environmentally protected areas or national parks, and seeks to improve efficiency when collecting payments from rights holders for not using water.
The changes are part of the government's overhaul of the water sector amid low rainfall and drought conditions, which have caused water resources to grow scarcer in central and northern Chile.

[superg1] 18/10/2014 23:25

Simmy

Those 2 paragraphs you mention


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.



On monthly updates some would like them to continue others wouldn't. I find that IOF put a lot of detail in their news, immeasurably more than some other shares I follow.

This isn't a dig at those that trade, but monthly updates are very important to them especially as a T trade may be due for expiry. In fact I'd say some make bets based on what an update may include so that creates share price volatility. Nomads I understand are generally against repetitive updates.

Being long term I don't worry about what the next month's update says as it makes no difference to my position or view. The more wells that are drilled the more brine that is added to the growing pot. Wells being drilled in any particular area will not go on endlessly and plants will settle down to high rates of long term supplies.


The current fracking in OK in simple terms just adds more brine and adds to the amount of commercial iodine.

In North Dakota if fracking slows up, then they don't need the emergency temporary use of irrigation permits, so that will be the first thing to go.

I had a look at the permit database for the area. The number of permits for the Missouri is very small and nearly all of them have nothing to do with fracking. That means a huge number are for aquifers and tributaries which are all listed as potentially unreliable supplies by the water bureau, energy companies, and Halliburton.

The inner details are far more revealing than the basic view of loads of water being available. Halliburton obviously seek to secure long term sustainable reliable supplies. They know full well over-exposure to tributaries and ground water supplies could leave them unable to meet their contracted commitments at any time.

If a drought did ever hit again in the area, whoever has the rights swap and discharge permit would be sitting very pretty. The same would happen is rights were fully appropriated.

As Bob Shaver the then boss said "it's only a matter of time before the state's water is fully appropriated,"


Oh and just by chance I just found a figure for temporary permits which cover 1.6 billion gallons, which is over half what they said was used for the year. So it seems potentially half of all the ND Bakken supply is from permits on emergency legislation that will be withdrawn. That's a lot more than I thought being covered by temporary permits

[superg1] 18/10/2014 22:50

A potential SQM ticking time bomb.

Some recent water law comments include the temporary suspension of water rights in times of drought in areas of national parks and reserves.

The main SQM mine (Nueve Victoria) lies to the south of the Tamarugal national reserve. To the north of it Cosayach have their operations.

In the May court case against Cosayach was twofold. SQM were challenging the theft of water contravening water rights they hold for the area and the environment agency also prosecuted them for the illegal extraction, which caused damage at the tamarugal national reserve.

In a rather lengthy Environmental impact assessment for the Nueve Victoria mine, concerns are listed for the water rights from the aquifer. While the mine is away from the reserve it seems the aquifer is linked, so any material drop in the aquifer would cause damage at the reserve. That has already been seen re Cosayach and of course SQM were claiming it is their water.

Chile, has recently increased the number of areas listed as suffering from severe drought.

If that ever extends to the Tarapaca region where the Pampa Tamarugal is, then it seems likely water rights would be temporarily suspended to protect the Tamarugal national reserve.

As SQM produce over 70% of their iodine at the location, such an event would have a big impact on the iodine market.

So worth watching as the Chile serious drought situation seems to be getting worse and affecting a growing number of locations.

SQM analysts will be oblivious and I don't blame them, as it's a laborious task trying to find the details :-)

[superg1] 18/10/2014 22:26

No idea Bob.

The US right swap deal is not dependent on IOF discharging any treated produced Atlantis water into the river system.

In 2003 the area downstream of IOF a important large wildlife reserve called Bowdoin suffered badly, rare species saw a big drop in numbers. The US fisheries had no answer to the lack of water and spent considerably sums trying to restock the area.

The US fisheries have about 100,000 acre feet or rights in Montana and North Dakota all of which fall below industrial use, so they can be upgraded. It's probably a unique deal US wide.

The discharge permit is probably unique too. When IOF approached lawyers to pursue the discharge permit, apparently they laughed them out of the office saying it would be impossible to achieve, so they carried on by themselves and achieved it.

On that point I checked some old data and found details of an IOF well producing 2,700 bpd of water with higher than expected gas content, 34 wells are capped off.

Now we are finally here, IOF went for standard rights in the first instance and why not, why use the trump cards. In the fullness of time I anticipate available surplus water rights will be fully appropriated. At that point it appears no one else in the Bakken has any other option but standard water rights.

Those extras are unique and potentially very valuable in the future, especially if the Bakken expands to the 30,000 to 40,000 wells they talk of, as maintenance water and reworking will significantly increase water use so far.

While on the topic I note North Dakota still has the irrigation water temporary industrial use measures in play. They will disappear at some point and will all be withdrawn

[bobsworth] 18/10/2014 18:20

Sg I note your interesting comment "Then comes the issue of whether any deal includes rights to Atlantis, the discharge permit and the rights swap."

As this could be a significant development could you please highlight any scenarios on how any of these could be included in any deal.

TIA

[superg1] 18/10/2014 16:29

I'm not too bothered how much they sell. My immediate interest is whether they do a JV and as a result gain a large payment and all costs met by the partner for the depot build.

On the amount of water that may or may not sell, it can all vary significantly depending on the amount of hot water demand, which can be 5 to 10 times the revenue of cold water.

Then comes the issue of whether any deal includes rights to Atlantis, the discharge permit and the rights swap.

So just a sit and wait for me to see what develops.

[naphar] 18/10/2014 14:23

Sancler
Somewhere in the publication c notice document it stated that the full allocation could be delivered in (IIRC) 206 days. I didn't try to follow your calcs, but check that document. It implied the pumps would not need to be running 24/7

[superg1] 18/10/2014 14:17

On the 'use it or lose it' point, the permit holder can apply for an extension each year which others have done and received.

[superg1] 18/10/2014 14:14

Sancler

They include the filling up time in the document.

As for contracts, we can only guess what they would include re conditions. One line that Lance did use some time back was 'take or pay'.

Cost of the depot. If it's going to be state-of-the-art with multiple hot water heating system and pumps as suggested then it's going to cost millions. Without hot water a lot less.

I fully expect a JV where the partner covers all costs. As detailed in an IOF presentation.

I take the funding part in the rns purely as a 'we are not desperate' slant to pontential interested parties.

[sancler] 18/10/2014 13:00

I’ve been reading the water decision and I have a question.

In order to have 3622 AcreFeet of water per annum to sell, Atlantis would have to pump the water in at the maximum flow rate (5 cubic feet per second) continually throughout the year. Any time the inflow pumps were turned off, for any reason, it would reduce the amount of water available to sell below the amount covered by the initial permit. The permit, assuming it is granted, is followed by a period of completion: “At the end of the period of completion, the applicant will have a perfected right to market only that amount of water which he or she actually contracted and sold on annual basis during the period of completion, i.e., that amount of water put to actual beneficial use.” In effect, use it or lose it.

Why should the inflow pumps be turned off? One reason could be that the depot storage tanks were full: “There will be two above ground storage tanks which will receive water from the pump station. The tanks will be capable of storing a total of 10.74 AF and will have safety overflows that pipe water to an overflow pond if pumps do not shut off when the tanks are full.” and “At times when the ‘output’ side of the depot exceeds the 5 cfs ‘input’ from the river water in the storage tanks would be depleted and vice versa.”

How long would it take before the tanks were full? In a “worst case” scenario, assuming no sales at all during the relevant period, 26 hours from empty.

What about emptying the tanks? If all 10 out bays were operating continuously then the storage tanks would be emptying rather than filling. Expressing both maximum inflow (5 cubic feet per second) and maximum outflow (4000 gallons per minute) in terms of cubic metres per minute inflow is 8.5 and outflow is 15.1. It would take just over 33 hours to empty the tanks from full. Thereafter, output would have to be restricted to 8.5 cubic metres per minute: 5 or 6 bays rather than 10, say, or filling in each bay at 225 gallons per minute rather than 400.

Both those scenarios are unrealistic: the latter definitely so, because it takes no account of “the time it takes trucks to enter the depot, hook up to the delivery system and exit the depot”: the former hopefully so. But both illustrate that a crucial part of the operational equation is matching output rates with input rates. If output is too low it can result in a drop of input, hence loss of immediate sales and longer term entitlement. Output can only exceed input for a finite time. The storage tanks provide some flexibility, but it is limited.

The ideal is a matching of inflows and outflows within a relatively short time span – days or weeks rather than months. The maximum inflow is fixed. So what about outflow?

That depends, logistically, on trucks. How many trucks depends on their size. To take, as an example, the largest I could find by Googling, it has a capacity of 64 cubic metres. To shift the total permitted amount of water (3622 AcreFeet) that would require 69807 truckloads in the year, equivalent to 191 truckloads per day. That is, a truck would on average have to arrive every 7.5 minutes all day, every day, throughout the year: or the same thing could be expressed, for example, as a convoy of 10 trucks every hour and a quarter. For smaller trucks the average arrival intervals would be shorter: e.g. 50 cubic metres would be 5.9 and 40 cubic metres would be 4.7 minutes. There is some leeway in those figures but, see above, it is not unlimited. In particular, it seems unlikely that longer than average arrival times (that is, less output/sales) in the winter could be made up by shorter than average arrival times (that is, more output/sales) in the summer, or vice versa.

That’s the theory. It all looks logistically formidable. Does anyone know how things are tackled in practice? So, for instance, do supply agreements commit water customers to collection schedules at the level of detail that, in the light of the above, seems necessary?

[beeezzz] 18/10/2014 11:51

A snippet from the NY Times on BBC website regarding oil prices.

"In a bid to restore balance Saudi could be playing its cost advantage against the higher-cost shale oil producers," he continues. "Saudi will perhaps have to let oil prices slide to $75-80 and let it stay there for a while for some US drillers to move out of the businesses and hence pricing power to get restored back with Saudi."

Will this impact on IOF?

[bryproj] 18/10/2014 11:12

Probably been asked several times before but do we know what the water plant will cost to build ?

[simmy1699] 18/10/2014 10:17

Sg thanks - everything seems to be lining up well. Do you have any responses to the last two paras of 26138?

[superg1] 18/10/2014 10:09

SQM released news this week re the impact of the coming tax changes.

Good timing that as they normally negotiate their long term supply agreements in Q4.

Oct 15th news

On September 29, 2014, Law 20,780 was published in the Official Gazette. This law modified the Chilean Income Tax Law and introduced a progressive increase in the First Category Tax, which will reach a rate of 25% beginning in 2017, subject to the application of the Attributed Income System (sistema de renta atribuida), or a rate of 27% beginning in 2018, subject to the application of the Semi-Integrated System (sistema parcialmente integrado). SQM S.A. will be affected by these modifications to the Chilean Income Tax Law, regardless of which of the two systems it chooses to apply.

In accordance with International Financial Reporting Standards (IFRS), SQM S.A. must immediately recognize, in its consolidated statements of income, the effect that this increase in the First Category Tax will have on its deferred tax liabilities.

S.A. estimates that the effect, under the Semi-Integrated System, will be between US$55 million and US$60 million. Notwithstanding the foregoing, once the final amount has been determined, it will be recognized and charged to profit in SQM S.A.’s interim consolidated financial statements for the third
quarter of 2014, which will be published during the month of November 2014.