Iofina Share Discussion Threads

[superg1] 01/9/2013 09:03

Re the AIM code

Obviously T/O could be something for the future. Many shares talk of it in their respective areas, but few are in such a niche sector, and can be so disruptive to long standing established companies. Hence I believe it is a matter that may feature for both Iodine and water.

Very few seem to want it, if IOF are to roll out the business plan and as we know that is in progress now.

The key part of the code imo that offers protection re valuations, is here-:

29.1 VALUATIONS TO BE REPORTED ON IF GIVEN IN
CONNECTION WITH AN OFFER

(a) Type of asset
This Rule applies not only to land, buildings, plant and equipment but also
to other assets, eg contracts, stocks, intangible assets and individual parts
of a business. Where such other assets are involved, the Panel should be
consulted in advance.


Note contracts, it is something we have mentioned before.

IOF have contracts with most of the top 10 US O and G companies. It will be more by now as contract negotiations still go on for new companies.

So in theory they have most of the US waste brine tied up in contracts. Then the patent stops anyone else getting involved in 3rd party brine extraction.

For water they have the 200k bpd contract with Halliburton (split 100k Mont and 100k ND). They also mention letters of intent to purchase water from others.

My point is I wouldn't worry too much about a cheap takeover. The contracts offer protection.

[roboben] 01/9/2013 08:16

Rock Star - Thank you for your astute observations.

That cash flow will appear for the first half of 2014 and will, therefore, first appear in published figures in the H1 2014 half-yearly report - published in September.

As I believe I've said before ..

Roll on September .. 2014!

[n3tleylucas] 31/8/2013 20:59

Thanks PUG, always thought the minimum was the highest 12 month price for a bidder with a stake. Thanks for clearing it up ... assuming it's right.

[naphar] 31/8/2013 20:36

From recollection PUG, that's my understanding.

[pugugly] 31/8/2013 20:12

Re takeover code.

From

"the level of the offer must not be less than any price paid by the bidder in the three months before the announcement of a firm intention to make an offer;
if shares are bought during the offer period at a price higher than the offer price, the offer must be increased to that price";

Unless tis is wrong a bidder does not have to offer the higest price in the last 12 months - Only the highest price that they have paid for shares in the statutory period before the offer.

Very differnt -

Can anyone confirm that this interpretation is correct ?

[superg1] 31/8/2013 19:55

Re The T/O code.

Under AIM rules contracts in place carry a value, and IOF have lot's of them.

Re the patent. I recall some time back the 'what if's'

I.E. what of someone else comes up with tech for the US, Oil company X gets fed up of waiting and links up with the other company.

Well the point there was that no one had viable tech, so there is no one else to go with.

As the details of the rich iodine brines of the US unfold, some may have wished to try and pursue it. However IOF have patented the business model, which is stunning. The value of that is obvious to IOF and a few others, but the vast majority have not realised yet how valuable that patent is.

[malachey] 31/8/2013 19:52

Madchick:

There was doubt as to whether IOF would be able to gain any advantage from being listed on AIM because they are based in the US, and so may not have passed the 'residency test' required to come under the relevant rules (the takeover code).

This rule change means that is no longer any issue with where the company is based, so for sure we now have the advantage of AIM takeover rules.

So basically it has just removed any doubt for us.

malachey.

[engelo] 31/8/2013 18:30

Rockstar: very informative thanks.

Producing a surplus is just around the corner and selling it the next 'hurdle'. I've been content with IOF saying 'we've got customers for all we can produce', and the view that the US iodine import total is an easy target. The identification of Dow, INtel etc is new to me and gives additional reassurance.
International companies? That's very interesting too: only knew about big sales to India.

One curiosity I have is what exactly are they selling? As no prilled product until 2014 it must be either crystalline/raw iodine out of the crystallisation towers or the pre crystallisation mud/cake product for which IOF believe there is a good market. And what is the selling price for each of these?

The various terms used are confusing. I recently put these questions to Sam but no response yet.

edit: one thing that is clear is that prilled iodine commands a premium but don't know whether the $60 per kg we use applies to raw or prilled iodine.

[rock star] 31/8/2013 16:35

A good post from Che7. The summer months have required patience but imo people are best focusing on the bigger picture rather than bothering about daily and weekly movements hence I infrequently check in here now it has gone through the concept stage. Looking at it day in, day out won't make things happen any faster! The company has come a long way in a short space of time.

The key for any business is strong cashflow. As they say "cash is king".

Once IO#3 becomes fully operational in October/November they will be producing over 2mt per day. The cycle time to convert this into hard cash is 60-90 days. There has been a significant cash outflow duing the last few months due to the outlay required for the 4 new plants and the cash position will probably be at its lowest in December.

2mt per day is a key landmark as that converts into free cashflow of over $2m per month and that will mean the business(accounting for the planned rollout program) becomes self-financing from that time onwards.

I also hope that once they are generating surplus cash month on month they will commence the share buyback programme as reducing the number of shares in circulation will enhance the long term value for shareholders.

One thing that the Sirocco Mining results have highlighted is the importance of the Chemicals division. Once you have produced the iodine you need to know who is going to buy the iodine and IOF have developed strong relationships with the likes of Dow,Intel,Apple,Troy as well as many international companies so they an outlet for their production.

As many will know they have expanded the Covington facility in the first half of the year in preparation for handling large volumes as well as planning a new prilling tower.

[n3tleylucas] 31/8/2013 15:39

Mind you, I do believe if an investor has a stake, regardless of whether it's big enough to trigger an automatic offer or not, if an offer is made ... it must be at a price no lower than the previous 12 month's high.

So if a bidder has no stake at all, the offer may be as low or high as desired, the 12 month rule doesn't apply.

I think that's correct?

[n3tleylucas] 31/8/2013 14:57

That doesn't mean a takeover offer has to be at least the highest price of the previous 12 months. What it means is that if an investor accumulates enough shares to trigger a compulsory offer, then that offer must be at least the highest price during the last 12 months. There is a massive difference.

[warrensearle] 31/8/2013 14:55

September traditionally the second worst month for equities

Not this year I think going to be a transformational month for several of my holdings

IOF - FUM - GKP - GPX (depending on what happens in Syria)

I've been observing here for the last few months lots of high running emotions and panic from some and sang froid resolution from others ... What do I think .. Nothing goes up In a straight line ... Nothing has changed in terms of the business plan and strategy ... Regardless of opinion on either side .. Cold hard facts in the terms of interims and iof3 and 4 commissioned on time or not are only weeks away.

When today someone described Boggle as being a "relatively long term investor in IOF" when be has only popped up in the last two months.. Puts into perspective people's impatience for progress.

It's telling that someone pointed out around 1 million shares have moved from PIs to instis recently .. The old adage of wealth being transferred from the impatient to the patient ringing very true

Lets see where we are by end of September one way or another the share price is going to move strongly this month

[madchick] 31/8/2013 14:55

My turn to be lazy - I thought the reason for being on AIM was because the rules on AIM meant that contracts had to be given a value. If IOF now comes under Takeover Code rules (instead or as well??) does this mean they lose the advantage of being on AIM and could perhaps head for a main listing instead?

[hitsha3] 31/8/2013 14:50

Time to climb, slow and steady all the way to???????.

[engelo] 31/8/2013 14:29

September tomorrow: a golden month imo :-)

[engelo] 31/8/2013 14:27

Thanks malachey, jointer.

This really is significant for us. Another example of IOF's good luck: or more accurately IOF investors'.

Not quite on the scale of the 3 forks coming to overtake us while we sit still and do nothing, or the helium story (remember how everyone was so sceptical 6 months ago), but welcome nevertheless :-).

[jointer13] 31/8/2013 14:13

malachey.......you beat me to it

[malachey] 31/8/2013 14:11

'The principal changes go to the essence of the Takeover Code; namely which companies are subject to its provisions. It often comes as a surprise to clients and foreign advisers, contemplating offers for a UK listed company that a company which is listed on a UK stock market may not be subject to the Takeover Code. This is either because a company is not registered in the UK (which for these purposes includes the Channel Islands and the Isle of Man) or its shares are listed on AIM , the junior market of The Stock Exchange, but that its central control and management (effectively a residency test) is not in the UK.

The new changes mean that companies who are listed on AIM and who are registered in the UK will no longer be subject to a residency test and, therefore, the Takeover Code will apply to offers for such companies. This follows a trend as before 2006 there was a residency test for all listed companies.'

[malachey] 31/8/2013 14:07

Engelo:

hxxp://gdknowledge.co.uk/uk-takeover-code-changes-afoot-for-some-aim-companies/

[engelo] 31/8/2013 13:28

SG thanks for this and many other excellent posts :-)

I know I'm being lazy, but would you mind spelling out the relevant AIM rule change re T/Os in October? tia

[bogg1e] 31/8/2013 13:10

SG much appreciated.

[superg1] 31/8/2013 12:21

Bog

No worries.

Many investors go for green stocks only.

Just on iodine look at the various Chile methods to produce iodine, including the sulphur section, it's not very green.

Then look at Japanese production from brines, they pump what's left over into the sea.

The zero emissions IOF circs came from presentations chats. IOF use far less harsh chemicals through the systems they have developed, which can mean zero emissions at some plants or extremely low emissions.


Forward think people would realise this is by far the lowest capex, opex and most environmental friendly iodine production system around,and now they have a patent protecting the business model.

The iodine world thinks Chile is the only commercial iodine resource left. That's why small mines have been throwing many millions at it. They all have high opex, so to them there is no real risk, well they will soon find out :-).

If you think of that carbon footprints, it is clear IOF will be well ahead in the market re that, and surely must become a preferred supplier in the future, for that reason alone.

Good news re the AIM rules from the October too. No guessing anymore on whether IOF would get full T/O protection.

[bogg1e] 31/8/2013 12:19

fresh, as far as I'm concerned i raised a valid point. This company is an excellent investment, I know that, you know that. I don't hold with this view that someone can come onto a board, ask a question that may be perceived as negative, and expect that to have any material impact on the share price. I know trolls exist but thats part of the mind game everyone has to face when investing. As for my true intentions? To make a profit like you. I dont short or spread bet. I have bought a chunk and am continuing to place trades on dips to bring down my break even without having to invest more capital.

[che7win] 31/8/2013 12:12

Naphar,
You're quite right, I assumed the $6m revenue the Shares article mentioned was for one application, not three. I've edited my post to not mislead.

Post 7438 has the Shares article:
"Further upside could come from the Atlantis prospect in northern Montana. This is estimated to contain 35 billion barrels of water which could be sold to producers in the Bakken shale formation. Iofina is awaiting approval from the relevant authorities to extract 80,000 barrels of water a day and this is expected BEFORE THE END OF SEPTEMBER. First Columbus says the project could eventually provide $6 MILLION A MONTH IN REVENUES."

The First Columbus post I've reread, (#6346) and your figures are spot on.

No more posts from me today, I've made two mistakes so I'll quit when I'm ahead :-(