Iofina Share Discussion Threads

[superg1] 25/10/2014 10:42

While we are in the SQM topic.

I was hunting for something else and came across this paragraph in their 2013 report.

'In connection with our current investments at the Salar de Atacama and Nueva Victoria, the success of these investments is dependent on the behaviour of the ecosystem variables being monitored over time. If the behaviour of these variables in future years does not meet environmental requirements, our operation may be subject to important restrictions by the authorities on the maximum allowable amounts of brine and water extraction.'

That is very relevant on a few fronts.

In May this year SQM took Cosayach to court for theft of water. Water which SQM have rights too. Cosayach as we know were prosecuted and many wells were closed down.
At the same time the environment guys prosecuted them for environmental damage to the Tamarugal national reserve. Their illegal extraction affected the aquifer
that underlies the reserve. This is the same aquifer that SQM have the rights.

More recently the first parts of the water law reforms have appeared and they include suspension of rights where national parks and the like are affected.

Chile is now suffering serious drought and it has been going that way for a few years.


Going back to the SQM paragraph. Nueva Victoria is their main iodine production site with around 6000mt produced in 2013. This is the mine that relates to those water rights and where Cosayach were illegally extracting water.


The NV mine was approved with the water use after an environmental impact assessment back in 2010.

We know Cosayach did a similar thing in 2011 and again damaged the reserve.

With the recent apparent drought situation worsening and those new laws, it could well be that the NV operations could impact that national reserve and SQM may well have their water rights suspended at the location.

That would be catastrophic for the iodine world and SQM end users. With the recent water laws and the circumstances on the current drought situation SQM must know they could be in serious trouble on the iodine production front.

Imo it's well worth keeping a very close eye on the Chile water situation, in particular any comments about that reserve or general drought problems/aquifer issues in the Tarapaca region.

[1madmarky] 24/10/2014 21:05

Maybe SQM feel that getting money in the future will be significantly more expensive than today?
With all the headwinds that they are facing noting that Mr market has been slow to catch on..... Makes sense to me.

GLA

[cyberbub] 24/10/2014 18:05

LOL dcgray... are you looking for SQM to basically buy you an Xmas present?!Yes I think it's possible IOF will be bought out, but not until we have established a clear upward path in production, and seen a full year's financial results... so perhaps 2016? I would not expect us to be sold for less than 200-250p 'if' everything is going well by then...GLA NAI

[dcgray21] 24/10/2014 17:41

Cyber Maybe they are looking to go on a pre Xmas spending spree . $250m or £156m would be what around £1 / share fully diluted ?

[cyberbub] 24/10/2014 17:29

What's the implication of SQM's borrowing... that they need a lot of money to pay for water desalination plants and increased wage costs?

[cyberbub] 24/10/2014 17:22

Superg, if you think 9000mt would give $125m after tax, that must be based on iodine market prices remaining anchored in the upper $30s... I would hope that they will rise substantially over the next few years... try plugging in a fairly conservative $50 and see what happens :-)No advice intended...

[superg1] 24/10/2014 17:19

Sqm have gone for $250m on a note when they seem to have plenty in the bank and a seriously reduced capex programme. ???

[superg1] 24/10/2014 17:12

meb

If they seriously plan to get to 9000mt plus, and believe they can do that, then I'll certainly be around.

$125 mill profit would keep me happy.

[cyberbub] 24/10/2014 17:00

Meb yes, 3-5 year timescale and these 'could' be in the £10/share range IMO... obviously a lot of brine to go under the bridge before then!...NAI

[meb123] 24/10/2014 16:34

Cyber
Sounds like a 5 year timecale to me to be no 1 . Although I do not intend to be a shareholder that long , I will settle for No 2 or 3 somewhere along the line with a respectable shareprice to enable me to bag my IOF pension pot. 100% pension withdrawals next year are timely although in all likleihood may have to wait a tad longer:-)

[cyberbub] 24/10/2014 16:21

Meb, the management are not suggesting that they will be world no. 1 in iodine next week!!But *if* they can get the original business plan back on track, then they will be able to use a virtuous circle of cashflow building more plants creating more cashflow etc... they have a quite fast payback time...And if you now add to this the potential for *at least* $5m (probably very much more) p.a. of free money from the first water permit, then you can see that with a medium/long-term timetable, how the share price could multibag....Remember that there are only 150M shares in issue, even assuming both convertible loans are converted...NAI DYOR

[meb123] 24/10/2014 15:42

Being No 1 was a bit of strange thing to say . With their 6 plants , they can produce a max of say 1000mt . The main miner in Chile can do 10K+ . If they do not intend to build any more plants ( as it will be expensive) , they will need a hec of lot of minis to reach their objective which also assumes the demise of one or two major producers in Chille . Dont get me wrong, I hope it happens but somehow its a long shot .

[engelo] 24/10/2014 15:22

Meb (26253): It's ticked up on my screen :-) Reasons to be cheerful:

In 7 days time IOF will know the production rate for Oct and very much hope that we'll get something out in the following week indicating stability or improvement, assuming they don't publish the actual figure which is a pity.

Whether this is part of the Autumn review or not, this can't be far away and should reveal plans for further rollout including minis. As per last RNS indicating aiming for No1 in the world, they can't credibly stand still for much longer :-)

And re water when we move into NOv, Dec 1st will seem a bit closer :-)

The depressed price of iodine is a bit of a downer, but with all that's happening in Chile that can't last for much longer and in any case IOF have the unique safety valve of IOF Chem which can warehouse most of their output and make good money in the process.

[arlington chetwynd talbot] 24/10/2014 15:11

Depends how you read that Meb, they did get it to 250 which fulfilled that obvious goal. A lot made a lot.

We are where we are and the market is cautious. Rightly so imho.

[superg1] 24/10/2014 15:09

No amount of hassling will change anything, the PDTG is done and it's waiting on the public notice period.

Public notice periods exist for dozens of different types of applications, there are 1000's each year in Montana littering the classifieds.

EG the IOF public notice in one paper sits alongside 2 applications for liquor licenses, the 'crazy horse casino' being one. :-).

As a reminder an objection is of no use. It has to be a VALID objection which means a load of research and evidence has to be provided. There is nothing to justify any objection about affecting rights for others on the Missouri. The flow rate of that river in something like 1.5 days flow covers a years use for the Bakken.

[meb123] 24/10/2014 15:06

ACT
I think they said that they want to maximise shareholder value . Well funny way to go about it. I apreciate its a long term thing but management should have realised the market will hammer them if good news does not keep comming given the disapointments in the past.

[arlington chetwynd talbot] 24/10/2014 14:49

A lot of people who don't post now are worse than you Meb123. I suspect Banksy's brokers have eased off a bit.

Tell me I'm wrong MELLY.

[meb123] 24/10/2014 14:34

I always suspected the share price will drift downwards in the absence of any news and this is exatly whats happening .
I hope 40p is the support level , nice round sum i can live with for the time being lol.... hoping for breakeven at £1.

[cyberbub] 24/10/2014 13:11

Yes... *please* don't call up the DNRC and hassle them!! Apparently it was constant calls from UK PIs that led to the significant delays in the process previously... the DNRC have done all they can now, they have approved our permit and they don't control whether any 3rd parties choose to object... so pls leave them alone...

[bobbyshilling] 24/10/2014 12:43

Fair point che7win. No offence meant to anyone.

[arlington chetwynd talbot] 24/10/2014 12:43

Oh come off it che! You really think bears could be bothered? lol

Look, we all know you lot do hassle everyone involved in any process.

[che7win] 24/10/2014 12:38

PI's or the company's detractors?

[bobbyshilling] 24/10/2014 12:31

Agreed, the less PI's hassle - the better. Cyberbub is correct; it will be shown on the website.

[stevo2011] 24/10/2014 12:08

We need to just let this play out , we know PI's didn't help the cause previously with regards to harassing them .