Iofina Share Discussion Threads

[bobbyshilling] 22/6/2013 13:52

If this was an oil company about to drill an exploration well, and suddenly they announced a 2-3 month delay because of no rig, then everyone would say, ahh well, that's the oil game, happens all the time. Now that IOF have a delay in roll outs it seems to be a big problem. Well actually it is not; we are going to get a larger output at the end of the delay, which will more than make up for any losses. We are told the tech is proven, so it is a sure thing. Compare that to an oil expl well, where it could be a duffer. No such problem here; that is the real perspective of the situation.

As for profits/margins/costs, we have the views of several who have worked out profits will be huge, even in worst case scenario, and that is just iodine. Let the company take it's course - I am pretty confident they are making the best decisions. It seems to me that Lance has been extremely obliging so far to PIs, in giving information that he is able to. Importantly, he has shown every confidence and we are told we are about to ping onto the radar. I can wait for that, and if the share price drops even more, then I'll buy even more.

[hitsha3] 22/6/2013 13:38

I ,am just asking questions, i am still invested with IOF and have lot of money invested, thats why i don't want any thing to go wrong, i think BOD need to come clean regarding few issues, new CEO, water,IO3 to IO6,prodution,oil,patent, public relation, profits.

[che7win] 22/6/2013 13:19

Hitsha,
The whole market is down. Despite rampers on NANO, Talk, Tht, they are well off their highs, much more than here and likely to fall further.

Lets contrast:

Just look at THT, fiercely competitive environment and they destroy their margins by selling cheaply to the supermarkets. No wonder they're downsizing their shops. A P/E of 16 for a poor business in my opinion, Hotel Chocolat much better and running rings around them.

Nano was overhyped, no wonder its off 25% with profits not expected for years and still at a market cap of £276m!

TAlk is another mediocre business ramped up. It's customer service is dire, I was on an hour to them last week with a simple request for help in resetting my router. The guy could only read from a script, ending up sending me out a new router when all I needed was a reset. The manager was able to do it straight away, of course they compensated me. Currently on a P/E of 24 falling to 14 this year and no competitive moat. No wonder it has a recent sell rating.

Now IOF: We are a Uk listed business operating in the States, in control of our destiny and with a competitive moat.

Investec price target is 230p, 24p EPS forecast on next year, a P/E 7 without water/mini pods which should easily be surpassed as per the AGM. No comparison IMHO.

Of course, only my opinion, I could be wrong but I have made 15 fold increase on my capital these last few years, so I'll follow my own research.

[worraps] 22/6/2013 13:15

....and £3 was the estimate for the end of June, by at least two esteemed TA posters, hitsha3. Just five working days to go.......somehow, I don't think it's going to do it, do you? But, with the pressure on the BOD to correct the misleading AGM RNS, who knows!

[hitsha3] 22/6/2013 12:59

My point is there is nothing that has changed from last two week, part from bad RNS,few months delay (which happens) and now share price gone down to reflect that situation, also markets are bit sickly. See what happens next week i thnk we will be ok, unless as i said before there is something that we don't know, thats why i asked the question to SG, because he is close to BOD, if he knows anything or herd. Two weeks ago we were giving end of year price target of £5, and £15 for end of next year, does that still stand or not.

[che7win] 22/6/2013 12:44

Maca,
I agree with your post, I did the same before investing and the same this week.
I sold some other stocks this week, but none here.

[escapetohome] 22/6/2013 11:13

Thanks Che7win - Keeping my fingers crossed - and hoping for a bounce on Monday.

[che7win] 22/6/2013 11:07

Escape,
The market is growing, we can fulfil part of that demand, but I see the chemical divison creating new products for sale.

If the sale price declines, some competitors will have to shelve their mines in Chile, others ( is it SQM? ) have declared that they will restrict supply to keep prices high.

Also worth remembering, it's like the price of oil. If oil goes too high, alternatives are found such as switching to gas or renewables. If it goes too low, those alternatives become less attractive.

With iodine, some products such as disinfectives have found alternatives to iodine. Any price falls would make iodine competitive for other uses such as the above or in tyres etc.

We have a competitive moat in that we can thrive on lower prices, the market usually gives those companies higher P/Es as they have higher margins and less risk.

I agree with you though, further down the lines, we will start to influence the selling price of iodine to the end market, the competition will feel very aggrieved I'm sure!
Now, what would you do if you were one of those competitors threatened with a decimation in your business?

Give IOF a high enough market cap and we will escape the clutches of the competition for now.

[superg1] 22/6/2013 10:41

Maca

It is a choice to attend presentations or not.

I'm about 2 years into the research. Some deals will be fixed fee's, some will be royalties. IOF have said very low opex.

It's pointless me posting on here what I think royalty rates/fixed fee's are and on what iodine price they may be based on.

All I will say for now, is don't confuse royalty rates on current market prices. There is an existing matrix long held on which they can be based, and I don't wish to post it here.

The facts combined suggest some plants early on under $10 per kg if they have decent bpd and ppm (those exist). For now it looks like io2, 3, 4 and beyond will have very good rates indeed.

[escapetohome] 22/6/2013 10:24

The market will be matching supply with demand no matter how many KG of iodine will be produced and what the pe is in 2014. So yes theoretically a share price of 130p is possible as is a price of £10

[che7win] 22/6/2013 10:17

Maca,
Yes the oil companies get a percentage of the profits from IOF, others will be able to elaborate better than me on the percentages.

Edit: I see Lib has answered your question much better above.

[maca1212] 22/6/2013 10:15

che7win, Librarian,

So the oil companies get a cut and the landowners get a cut and iof are now guiding opex sub $10 on iodine production?

My biggest concern remains visible proof of continued IOF margin improvement and more importantly product/pricing power. Historically (i.e. in 2012) IOF achieved finished product revenues per KG of $31.35.

In same period sirocco quote figures like this in their 2012 report "Iodine sales prices averaged $61 per kilogram".

My question regarding the sub $10 IOF opex cost is what does that deliver? Cake? or prill that commands a much higher sales price? It would appear to me that the opex is going to be substantially different across plants, mini-plants and pods, given the variability of supply experienced in Q2 in what should be the current lowest cost and most stable of these options (i.e. multi-well, pipeline connected plants like IO#2) I would question the ability of anyone to quote a future blended opex cost outside of a fairly broad range. Some people may have better crystal balls, but the future is still an uncertain place.

We also need to know that we are comparing apples with apples when we discuss opex - it is very easy to run away with the wrong impression.

One thing that has impressed me with the SQM and Sirocco is the speed with which they release financials, and the biggest concerns I personally would have had with sirocco (with the exception of management's tendency to be rewarding themselves, horsetrading other 'assets' with the company and daftness on the ore processing side with the ALP fiasco which is quite a set of blots IMO), and the one that appears to have the highest correlated impact on its opex is the average PPM in the mined ore.

That seems to be improving over that achieved in the depths of 2012, but TBF higher opex and to some extent less 'pickiness' on input quality which may have been contributory factors in the ALP situation and in turn on the higher posted production cost. This is a feature of the rush to supply when markets in the end product are hot as they were in 2012.

IOF need to deliver a bit more bottom line proof of what they are briefing before I will commit, and while that means I may miss what might be becoming a very attractive looking boat, those are the breaks.

M

[ramu kumar] 22/6/2013 10:13

Some very good posts today especially che7win's. Personally, I feel the stock was oversold and any positive news from BOD will steady some nerves including mine!

[the librarian] 22/6/2013 10:09

Just my thoughts, if the institutions are happy with the current situation then that is what matters, but sounds as if CF didn't play ball with them, or maybe he did? We will find out in due course I'm sure!

On the share price side, there are of course many things that have brought us to this point, L&G selling due to the new fund manager being a bit of a catalyst. For the moment there is an 'acting' CEO in Chris Fay and it sounds as if he doesn't particularly enjoy the job and will be doing his utmost to get someone in place very quickly..... they know plenty of high fliers capable of taking it in the direction that they want it to go!

A setback for the moment but they can get everything prepared and up to speed. In business everything does not just stop because of a delay, in fact it helps to bring other things forward, the mini Iosorbs for example.

A delay on 3 means to me that 4,5 & 6 will be focussed on i.e. what preparations can be made to ensure that targets can be met. There will be some bright people there moving everything forward as quickly as they can.

As for the PR person, the point has been missed by all that they already know who it is going to be, and I'm sure she knows as well. If that person has been pointed to this bb, which I believe IOF read.... I think you have got the gist :-)

[che7win] 22/6/2013 09:55

madchick 21 Jun'13 - 22:26 - 2983 of 3006 0 0

"At the end of the day, the BoD will make the decision and they have declined (so I have heard) a bid for two quid in the early days. I don't doubt that the BoD will get the best price they can which I suspect would not be what most PIs would consider as a low bid, although I am with SCRUT in that any bid is a low bid to some extent (although I believe any accepted bid will give us the money now say at least one year earlier than we could realise it by waiting and keeping IOF; just guesswork based on my belief in the BoDs savvy).

I wasn't going to post on takeovers again but I did want to raise that issue with the CEO and state that I don't believe we will have a "cheap" takeover in the sense that I feel many are imagining/fearing."


Madchick,
I never heard the early bid mentioned before, interesting. I agree with Scrutable at this stage, if anything I am glad for the realism that nothing goes like clockwork in business, including with IOF.

If we had a takeover approach now, I think it would probably be low ball, pitched at 300p and quickly rebuffed.
The potential acquirer would know the offer would have to be raised, they would probably raise it to 350-375p.
How many wouldn't take that right now and feel glad? I would be sorely disappointed.

I tell you why I would be disappointed; I have my calculations where I believe 330p is fair price for year end based on 5 plants operational at 250Mt.
This time next year, based on 9 plants, I see 660p, end of next year £9.
I won't believe higher PPM and therefore MT produced for each plant until the company declares that; I don't need to.

If however, what superg mentions that after the meeting plant 3 and 4 were mentioned as being 500-700Mt, then that will blow my assumptions, that should be made public to shareholders right now as my price targets triple...I find that hard to take in, no offence intended to superg or others.

The problem is, I dont want a bid as it will be based on what the acquirer knows about the company and shareholders wont know how good their business is.
There is no way we would be taken over at a price that I deem as fair at this stage.

Even if a bid such as the above scenario is rebuffed by the board, the acquirer might go hostile and go direct to shareholders.

Here is my biggest fear.....once an approach is made for us by anyone, IOF will be in play...it's days will be numbered and I believe it will succumb to a takeover soon after that.

Baguette, you talk of ramping, I truely believe I am being honest in my thoughts. I never expected IOF to fall through 200p, I thought a range of 200p to 250p would be fair at this stage until we hear more news to move us. I have tripled my money on some purchases, no intention of selling, I bought more at 202p.
You talking of 130p as a possibility I find totally unrealistic, knowing that 5 plants at 250MT should make us £30m profit next year alone. You believe that justifies a P/E of below 7 at 130p?

I would sell everything else I own and buy IOF if it fell anywhere near that. I used to think superg was overly optimistic, I don't any more.

200p is an absolute steal IMHO, I don't factor in any water revenues, PPM higher than 250MT per plant, mobile units or talk of larger units.

This is the best company I have come across in 12 years of investing, it has a lovely moat around it which gives it competitive advantages and I will continue to accumulate at these prices. As a long termer, any falls from here I will be taking advantage of, the market will sort itself out of its panic eventually.

PS I'm not afraid to criticise the company or to mention the negatives as I see them, I believe the company should have done the water JV last autumn, I mentioned that after the RNS was released Wednesday. I also think the RNS shouldn't have mentioned the convertible as its highlight first and this paragraph for me was the worst:

"Production outages are still occurring due to power failures at the brine producers' facilities and extreme weather (such as tornadoes in Oklahoma and 30cm of rainfall in a day, as recently as 15 June 2013). "
It comes across as feeble excuses. the rest of the statement if reread comes across as bullish, but very underplayed, especially on IO2 which post Q2 will have enhanced production.


PPS: the delays for IO3, 4, 5, 6 matter to me not one jot, although the delay until now has been frustrating. The important thing is to get most completed and running by year end, here's why. I want them all commissioned in time for next financial year starting January. That will mean a very flattering comparison with this year for 2014. What matters is seeing them running for a full year come January so we see them for the full year of the 2014 accounts.
Delays should be minimal going forward now that the company has a "standardised plant process and construction".

All IMHO.

[diggulden] 22/6/2013 09:50

The reason for the fall is pretty obvious to me, we have risen a long long way since this time last year, a LONG way. Many will be sat over massive paper profits and with the markets wobbling, will be locking in those profits, nothing wrong with that. We cannot go up in a straight line. This whole idea of writing to the BOD with a list of names is ridiculous. The share price increased TEN fold in 18 months, not a bad performance, let the BOD get on with their day job, do NOT start to petition them, that would be the beginning of the end of investor relations.

[baguette] 22/6/2013 09:48

SG no I chose not to attend the AGM. I had been to the PI meeting recently and felt that the only new information would be a slower than expected progress - true as it turned out.

You know I have always admired your fantastic analysis work and some others too - but in the end data is only data and it in no way gives any guidance to the realities of managing decisions and the opportunities and processes.

No disrespect to the management intended but the situation TODAY is a bit tricky. No CEO in place ( and what sort of person are they looking for as we seem to be hovering in mind between a take out and developing the business) - what next for Lance and his holdings (are there also business issues at play here?) - missed targets etc

If one did an analysis of the data and words on the BB over the last 6 - 9 months and then did one on the RNS promises/indications over the same period versus where we are today the gap would be huge. So to be honest I am not very interested at the moment in speculation, nods and winks etc. I have my current reality and it will only change when RNS notes tell me things have happened and not what will happen.

give me the facts man !!

[the librarian] 22/6/2013 09:37

Iofina pay the oil companies a royalty on all iodine produced from the brines, that is why the oil companies are happy to supply, the landholder also gets a 'cut' which apparently are far better terms than Toyota tsusho were paying. If they well stops producing then they switch brines, there have been several discussions around IOF extracting from previous SWD's that are no longer used and sitting on those to extract the iodine.

I can appreciate what you are saying Maca, but the oilies are happy to supply IOF with the brines and will work together and adjust as necessary. The royalties that IOF pay greatly reduce the cost of disposal which is a win win situation.

[naphar] 22/6/2013 09:31

Whilst I agree with comments on here about the RNS being poorly worded, I don't think that, or the slightly lower than expected Io2 production figures are entirely to blame for the current fall in share price.

As I see it, the shifters have had the luck of a perfect storm, in much the same way as longs enjoyed a fantastic ride when the potential of this company rely started to come to the core. That perfect storm has seen Lance design (for very understandable reasons) which in itself can cause jitters, the market in general has taken a beating, L&G have sold out, in addition to which we have had some delays (chosen to better the future of this company) and a poorly worded RNS.

My overriding feeling from the AGM was that management are committed to delivering value for shareholders, but cannot do so with their hands behind their backs, Rome was not built in a day and we need to be patient.

I am happy that the company know the RNS should have been worded better. I think they have heard that by now from several directions. They need to be allowed to run this business. They may well decide to up the PR game based on feedback received. They may have reasons not to. I personally feel they deserve the right to decide what is best.

In addition, I feel we have been lucky to have such open PI dialogue so far. I welcome it but don't wish to create poor relations. I think CF is far less open to PI communications that others especially Lance. Who knows how a new CEO will react.

For all the reasons I state above, I think it's time to let the company do their job, and I don't think we should be raising what amounts to a petition to get them doing things differently.

I read an interesting comment somewhere, basically saying 3 month delays, share price back to position of 3 months ago. On site build of IO3 has started, output potential has roughly doubled based on latest digging, and Io2 should be up to full brine capacity in the coming weeks.

I have no idea if the shapes price will continue to fall next week, I wish I did, but I continue to hold. Lots of good news is scheduled, and we know how fast the share price can move when it's on the upward trajectory. If it keeps falling and settles much lower than here, I will probably be buying more.

NAI DYOR etc

[che7win] 22/6/2013 09:21

Maca 1212 - Re your comment below

"One thing is certain - I don't see the 'oilers' continuing to pick up the whole tab for brine disposal on wells that are trending towards non viability on oil and gas production while IOF gets to keep all the profit, and that's without the landowner's cut."


I don't get this, what do you mean IOF keeps all the profit? IOF have a profit sharing agreement with the oil companies, they help make oil wells more profitable for the oil companies, why do you think all the oil companies are eager to do business with IOF?

[superg1] 22/6/2013 09:00

Bag

A friendly question, did you attend the AGM and stay for Q and A well after. It was personal choice to stay or go.

3 and 4 are 500mt plus units. We know that.

io2 new brine will be much like that going to io3 and 4.

The water permit could arrive within 45 days, yes it could take longer, but that is the guide.

The other factor is contact away from IOF with others in the business, and it is that factor that has completely changed my view about what is going to happen short term on likely suitors.

It is a fact that I and 1 or 2 others, dig out information that IOF are unaware of. We send it to them and have in the past. It was of no surprise to me that they suddenly switched io3 from Texas to OK, and every other plant in the near term roll out.

They got something from us they could never have dreamed of getting.

So we share the research on here, and sound off about what is there re iodine, oil, and water, but we can't really spell it out on here exactly what that is.

'We have, and currently are, however, badgering IOF to cough up on what we know'

Scruts will agree, no more under the radar, we know the story and it's high time IOF told it.

So don't be surprised if that starts to happen. If the radar is to ping near term, I may have caused it, so they need to spell out what they have.

As I say investors armed with the actual information (BPD/PPM) can then decide about timelines on plants and likely revenues.

Other public companies spell out those facts in detail with anticipated forecasts, yields and ppm's. IOF have completed the radar avoidance to block a cheap take out last year, now they need to do the same.

[writz] 22/6/2013 08:57

SG, if you're right, I guess a maximum valuation for the company depends on (1) enough proven production to do the math on (maybe that's the 'ping'), and (2) enough awareness among shareholders as to just how many golden eggs could be laid with the IOF goose. That's a whole different strategy PR wise, and would probably have them looking for a different kind of CEO...

[ansana] 22/6/2013 08:55

SG you wrote "They are keeping an eye on IOF, I have it in an email from them, stating that fact." so only some sections of the market are unaware of IOF. The radar idea just took knock. In that case wouldn't it be a good idea to get the share price up. What really is causing the suppression, surely it has to be more than securing the last few leases.