Iofina Share Discussion Threads

[superg1] 16/7/2013 22:22

Escape?

What thread?. Familiar sounding name that one, probably an AKA so just ignore.

EDIT

Just realised it's probably a thread I have on filter, I suggest you do the same, I presume you mean J big which is N3 for your info.

Dare I mention a can of petrol Nick S lol. You know what happened last time I said that.

[n3tleylucas] 16/7/2013 22:14

That's nothing compared to the attack on your financial well-being that's coming ... your way. You should be thanking him.

[escapetohome] 16/7/2013 21:57

The attack on me from Jonnysmall on the other thread defies belief. Has he completely lost the plot?

[bogg1e] 16/7/2013 21:53

Monty, sg1 cheers.

[superg1] 16/7/2013 20:46

Monty we also have the switch re the 2 month credit/debit situation as IOF move from being a buyer, to producing their own.

[superg1] 16/7/2013 20:43

Bog we can practically work out what the tonnage is for H1.

We know they are doing 60mt from recycling, and that io1 was doing about 1 mt per week.

So in theory around 56 mt from io2 and recycling. Then the figures for April May and June are mentioned re io1.

That AGM rns was a bit stupid as it talked of a slightly lower rate at io2 which meant a loss of about 4.5mt over the period.

It was pointless as IOF have a surplus, and bought bulk iodine at the end of last year (inventory) to cover their needs and to allow for any slack in production timelines.

There was talk of io1 getting better and more brine, but I don't really look at io1. Tweaked ppm brine up and running with more bpd and I can see it being a 100mt unit.

The key now is io2 getting it's new brine. The old brine is was due to get, to take it to 30k bpd apparently was far lower on ppm than waiting for the new brine. As we know the partner took brine offline to allow the drilling of new wells.

I can talk of high ppm all day, and had been hoping for a 350 ppm average. After all Iochem have been on ranges of 300 to 400 for many years.

However when IOF are finding ppm for 450mt plus units, and some higher due to abnormally high areas, then 350 average isn't unreasonable for that area.

BUT if Iochem are on 300 to 400 (quoted) and Woodford on 1200 (low bpd), what have iof found that has them scrambling to secure leases.

Well they have said, ppm of up to 2000, 450 plus, abnormally high, and now a new word Hyper ppm. Then the 50k unit comment.

There are 1000's of wells to come in the OK area over the next few years.

A 50k bpd unit on 400ppm is 900mt at 90% yields and 10% down time.

It could be 300ppm it could be 500ppm for some plants, but what is clear is that the drilling boom is, and is going to continue producing potentially higher ppm averages, and new record single wells.

It's also clear that the initial roll out this year and next will be OK. Just a few months back I was hoping for 2 of io2 to 6 going into OK, now it's all of the initial roll out.

So what if by the end of next year we have 10 450mt plus plants, plus pods. It would in theory out us over the 5000mt mark.

It's not fantasy, it's in IOF rns's, it's in Oklahoma documents old and new re ppm in the area, we know the yield rates IOF quote, which can be higher than the 90% yield rate we use.

Let's not forget Iochem are producing 1200mt from one plant. I presume at 300 to 400ppm they are doing up to 100k bpd.

It's not pie in the sky, if IOF deliver, get plants in, and get them up to high bpd, then the iodine will come out the other end, io2 has proved that.

Chris Fay did say at the AGM io5 and 6 may be 'by the skin of their teeth', but he didn't link that as crucial to the exit rate as being the largest producer in the US. io2 to 4 would do that for them.



The inventory is there to cover chemical div needs in case of mishaps. It was said that once io3 is producing they won't need an inventory.

It was said that the chem div could expand withing the current building (added lines and shifts etc) to use 800mt for derivatives. Then there is a 1600mt market for iodine 'cake' the raw product. Anything after that would need prilling, as prilled iodine is a preferred product.

The way I see it is that the fastest growth route for IOF is to concentrate on the higher spec products with higher margins, then sell their excess production into the market of end user chemical divs. The way that production looks set to expand, bulk sales of raw iodine seems to be the way forward imo, once they have a number of producing plants.

Once io2 and co are on 30k bpd, and figures come out about what they can do, all this waffle about being an AIM momentum share, with no teeth, will be gone.

It's all subject to delivery of course.

[monty panesar] 16/7/2013 20:02

Bogg.I suspect the Sept figures will make difficult reading as some iodine will have been bought at market and some internally produced. They will be a transitional set of accounts IMHO. There should be an improvement in gross margins which will increase again in H2.

The CAPEX in H1 will obviously be high.

I agree with most that once the 6th plant is running the price will be over £5.

[n3tleylucas] 16/7/2013 19:48

You'll be doing fantastically will IF you make £5m this, £10m next. The numbers you're quoting hide a stark fact ... you don't know what's good. A lesson is coming your way.

[bogg1e] 16/7/2013 19:46

Hi Monty, thanks, i was hoping that we would get better ideas of margins per product line, stock held in reserve for the chemicals division, further costs such as prilling towers etc. I know we will have to wait til 2014 to get the true picture of this years output, but margins per product line would really help to narrow the revenue ranges. Cheers.

[monty panesar] 16/7/2013 19:43

Bogg

I think the Sept figures will be largely irrelevant due to relatively low production figures in H1.

[monty panesar] 16/7/2013 19:40

Bogg,

Yes 1500m t run rate seems to be the target but the company aren't committing to it in the research estimates so there is massive scope for upgrading of the price targets to continue.

Whether they hit the 1500mt run rate on Nov 30th, Dec 31st or Feb 27th does not matter as part of the big picture.

Business plans get delayed but compared to most industries any delays here will be in days and weeks not months and years.

MP

[scrutable] 16/7/2013 19:24

I don't see the connection between the risk at GKP which lies in corporate malgovernance and corruption and personal greed, and CEY which is one of the best managed middle size gold growth shares in the world. There is still a huge risk of civil unrest at CEY. The Herald Tribune today listed the many steps taken in haste by the Brothers in attempting to create an intolerant Caliphate (religious dictatorship) like Iran. The military stopped it just in time.

If the army can keep Egypt on the rails CEY has ten-bagger potential, but the current 90% discount on the share price is justified. This is a real speculation.

The first play is to see the risk radically reduced and the share price double. Then let's see how the political stand off develops

[bogg1e] 16/7/2013 19:19

Net, we know the numbers are wrong, they are just the best one can come up with considering the limited available facts, that is why we have to wait til september. Until then its guesswork.

[n3tleylucas] 16/7/2013 19:01

All these numbers are wrong. You are heading for bitter disappointment, and you've only yourselves ... to blame. Just watch what happens.

[bogg1e] 16/7/2013 19:00

Monty why would the BoD mention 1500 tons if they don't expect to achieve it? It would seem strange to mention it at all if they don't have to, they are after all trying to stay "below the radar" are they not?

[monty panesar] 16/7/2013 18:53

I think we have to remind ourselves where current production is and not get carried away.
In the AGM statement CF said Q2 production would average circa.0.7kg per day or around 63m t. Therefore fair to assume H1 2013 production is in the 75-100mt region.

I would suggest that the majority of this amount will have not converted into sales as it will have been work in progress at IC.

Does this matter? Not one iota if you understand the business model. After all investment is about looking at the profitability 2 years out.

It is an ambitious target to get to a run rate of 1500m t by the year end from where they are now but if they miss it it will only be by a few weeks and once again has no affect on the big picture.

People have to remember it has taken ASOS a decade to get to where it is. IOF are looking for a growth rate much faster than they have achieved.

[superg1] 16/7/2013 17:23

Seems to be a bit of confusion there. The top US producer does 1200mt, but total US output is around 1500 mt all Japanese owned (Toyota).

IOF talk of exit rates, or annualised rates. In other words a daily rate that over a year would involve production higher than the biggest US producer. That will either be Iochem, or the Japanese owned collection, which includes Iochem.

From the data we saw re io1 and 2 we know that from 18.7k io2 could do .75mt per day.

For 1500mt as an annualised rate we would need just over 4.1mt.

My view re the potential for each plant as a daily rate io2 to io6 would be a range of around 1.25 to 1.75mt per day each on 30k bpd.

io1 should be on .25mt per day when up to speed.

Then we have some pods to consider if they have those in place on the high ppm sites.

At the AGM the suggestion was the new brine for io2 could be days away, but you have to add on a week or two to be safe. Then would come a run time for yield optimising and production rates.

If ppm's are very good as we suspect, it should reveal itself, if IOF quote any production figures.

If you recall at the AGM, they did say it was a bit of a mystery as to why ppm would be very high in one location, then just miles away, very little. I hear they have cracked why that is, so will know exactly where to go hunting for samples.

In the background there has been the odd rumble of very high ppm, but we'll just have to wait and see on that one. Very high ppm on any single hit normally means low bpd for a well.

We had heard of 1000 plus for 3/4k bpd and high hundreds bpd at 2600ppm (hyper.

However this Miss play has only just begun, and they may have to think of new words, as I doubt 2600ppm will be the record.

A sudden move to daily rates that mean over 1000mt will stun the sector. As will the capex and opex costs involved.

[the fat controller] 16/7/2013 16:44

I like to keep things simple.
Someone else posted earlier that each 100T of Iodine produced = 51p on the share price, at a p/e of 25. 1500 x .51 = £7.65. So we are in the right ballpark, and this method is even juicier than mine!
C'mon IOF, just do it!
TFC

[engelo] 16/7/2013 16:38

bocker: that's short and very much to the point. Never owned a share before where a takeover was the major threat :-)

Meanwhile been having a look at TFC's simple valuation stuff (post 5216).

TFC: as you say, your 2014 profit figures ignore anything over and above I01-6 .

For 2014 we have a full year from I01-6, ie I01 + 5 I02 units.

If we assume 2 new plants per quarter of I02 size (conservative) this adds a further 2 Io2 units in total for 2014 (2 producing for 9 months, 2 for 6 and 2 for 3 months).

This increases the 2014 production figures from I01 + 5 I02 units to I01 + 7 Io2 units.

Also think we could reasonably add in 4 Iosorb units (can't remember profitability of these: help please!). Guessing 0.5 I02 units each. If so this works out at another 1 I02 unit, making I01 + 8 I02 units, more than 50% higher than I01 + 5.

Could argue all day about PEs, but based on the above your figures for 2014 production/profit could imo reasonably be increased by 50% :-)

[bocker01] 16/7/2013 15:50

All this valuation stuff is very simple. IOF possesses the technology and leases that would allow a massive chemical company with a big cheque book to buy IOF and control the iodine market for many decades. PEs do not count. Competitors will become extinct. Uses and demand for iodine will grow through out. Few niches offer such possibilities for profit growth. Any bid is likely to be contested and the only predictable outcome is that whether IOF is sold this year or next or in 2015, it will be sold for a lot more than most anticipate.

[pcjoe] 16/7/2013 15:12

Just one thing chaps & forgive if I`m wrong but no one ever seems to allow for the landowners lease cut or royalties to the JV O&G partner - I think I`m right in saying that this not included in opex? - Did I hear a while back that the royalty payment is likely to ba a straight % from Iodine sale gross profit figure base on the current market rate?


If the above is correct - How much should we assign as partnership/lease costs - Is 25% reasonable? - IOF appear to be keeping these figures very hush hush for obvious reasons as different partners are quite possibly on different rates

EDIT

TFC I note that you are amending your figures for tax as normal - Bog1e`s figures seem to assume that we have $15 million or so tax to set off? - so hardly any tax applicable for P/E purposes in 2013? or can it just be set off against capital costs & not income?

EDIT

If if I was an Oilie JV partner I`d be looking for 25% but then again IOF are in a very strong bargaining position - Plenty potential & willing partners in the Mississippi Lime region looking to cut costs & only one IOF

EDIT

I`ve amended tax provision query in above

[pcjoe] 16/7/2013 15:01

Agreed TFC - As Jerry`S client said - "SHOW ME THE MONEY!!!!!"

[the fat controller] 16/7/2013 15:00

If we take 1,500T per annum by end of 2013, and leaving aside IO's7-14, then
1500T x $50/kg profit x 0.67 ($ to £) x 0.65 (for 35% tax)= £32.66 M post tax profit
127.4M shares = 25.64p eps x PE 20-30, say 25 = £6.41/ share
Simples!
So Iofina, just do it!
TFC

[urbanyeti] 16/7/2013 14:50

1500mT is the expected run rate at the year end and needs only IO1 - IO4 to do this 5 & 6 should be up & running just before year end so the exit rate may be higher. To add to 1 & 2 running all year 3 may get 3 months production, 4 perhaps 2 months, 5 & 6 1 month between them. So with all new production weighted in the last quarter 600t for the year sounds about right, but then we should produce 600t in the first 3-4 months of 2014!

[bogg1e] 16/7/2013 14:50

Well Naphar, Im happy to be proven wrong, i want to nail the figures as exactly as anyone else. So if anyone knows whether the BoD quoted 1500 mt or not pls let us know, after all 1500 tons for 2013 isn't a figure i plucked out of thin air.