Iofina Share Discussion Threads

[che7win] 05/11/2013 11:31

£10 sounds very nice, but we are nowhere near that takeout price, currently the share price can't get to £2.
A takeover right now *could* be successul at £4 I would fear. That may be enough for short-termers to accept and walk.

The market doesn't believe the growth, pure and simple. It wants more information and more plants rolling out before it accepts the formidable business IOF is becoming along with it's barriers to entry.

We have a lot of work to do to create that value over the next 12-18 months but all achievable.

12 plants end of next year should take us to a 3000 MT run rate.
That should mean around 48p EPS (on iodine price of $45 kg), so on a P/E of 10 that is £4.80 (assuming no share dilution).
Add water revenue and that is £5.60.

Obviously, if we achieve the expected growth, the company will not remain priced on a low forward P/E.

On a more realistic P/E of 20 (minimum), end of next year we could be looking at £11.20 including water.

Even if my figures are 50% out , we're still looking at £5,60 or a 3 bagger from here.

Shareholders just need to sit this one out to be rewarded IMHO.

[pigeon1] 05/11/2013 11:11

£10 would be veeery nice..

[rogerbridge] 05/11/2013 10:16

I see you have been on the OBT thread SG.
Looks to have some good prospects, I was thinking of investing a few weeks back but HAWK won the day. I thought the OBT price seemed good value considering the long term prospects, but I may buy some at a later date when the revenues are rolling in, though the share price will be higher.

[spike_1] 05/11/2013 10:09

Chris 'mentioned' £10 as a take-out price at the Shareholder Presentation in September. If we were to get a friendly offer it would need to rise to about that level.

If a hostile TO were to appear from an Iodine Producer (to protect their market share and control the market price) I would expect counter offers, not least from an end user such as Dow Chemical.

If IOF can demonstrate their ability to get IOF#3-6 operational and producing in a 5 month window (a probable pre-curser for any 'near term' take over offer), then they can surely get #7-12 up and running by the end of 2014, which, by the time a take-over approach appears will be near term and earnings visible.

If IOF can then demonstrate they have licences and guaranteed sales for - say - another 8 plants in 2015, we will be arriving at a price that looks good.

I'm discounting the sale of IOF's other assets which a bidder will probably not consider core to their needs and IOF will keep.

Any serious hostile bid will require IOF to demonstrate the value of the company. At that point I would expect total transparency of ppm's bpd, licences, etc etc.

IOF will not get taken out at anything like our current level.

Best wishes - Mike

[superg1] 05/11/2013 07:36

8cindy

fair value is the key and in TO rules any contracts in place are included in valuations, it seemed to read that things like plants being built or forecast get included.

IOF have contracts with most of the top 10 US O and G companies. If you just take Oklahoma that covers over 2.5 million acres of the prime Oil area.

IOF have 500mt single plant capability, at current prices $20m p.a. revenue producers.

Then add a patent which covers the business idea.

TO requires a 75% vote, the BOD own 15% plus of that, Stena 10%, plus another of the large holders knows the score etc etc.

But certainly the contracts will carry a considerable value.

That's excluding that 200k bpd water contract with Halliburton

[meadow2] 05/11/2013 07:32

8cindy - In practice, it is likely that any predator will want a reasonably sized holding of their own before attempting a full takeover of IOF. This should mean that the market price will rise steadily as they buy shares to achieve a reasonable holding. This could lead to shareholders and the board realising that a takeover is in the offing and another support to the market price would possibly be more buying by present holders. Any serious approach to the board should be made public and, again, the market will buy to take advantage of what is coming. The board, acting on behalf of all shareholders, should attempt to negotiate as high a price as is possible before recommending any offer.

This is, at the moment, a speculative situation! I have already stated earlier on this board that I don't expect any takeover attempts until the 2014 results are available and I stick by this. As to the price of a takeover, it seems that £7 to £10 seems a realistic possibility - but who really knows? I don't!

[crazycoops] 05/11/2013 06:18

In theory 8cindy, all holders of ordinary shares in the company get to vote on a takeover. In practice, a takeover approach is likely to succeed if it is recommended by the board as in this instance, most institutional investors (and many PIs) will support the board. In the case of IOF a hostile takeover approach (i.e. not recommended by the board) is unlikely to succeed as directors and those close to them (i.e. LB, Stena etc.) have enough shares between them and enough support among PIs to block an unwanted takeover approach.

The bottom line in my view is that if the board recommend a takeover, it is likely to be a done deal from a PI perspective.

[8cindy] 04/11/2013 23:27

As a novice investor with a very good number of shares in IOF I would like to ask you guys out there what protection we the PIs have if and when somebody tries a takeover? We sit here patiently listening to SG and his excellent updating, but my concern is when it starts to turn good what is there to stop the 'powers that be' accepting a quick good offer and all our patience proves fruitless. Could some kind sole out there reassure me that we can't be hung out to dry before we see a fair return for our investment in both money and time rather than a quick grab and run.

[superg1] 04/11/2013 22:47

EWCT

No comment, even the Shareprophet crew are bullish there, and hear similar things.

They should get their ears closer the railtrack (an old western ambush trick), as they will hear in advance what's coming, sounds travel faster in solids.

[superg1] 04/11/2013 21:40

On the other point. No 180 does not in any way represent what iof plan to achieve over the next 12 months or so, which is 12 plants, some pods, a water depot (maybe more).

We have no idea if a partner will arrive on farm out to test the 3 forks acreage, but at some point in time it will surely happen.

About 12 months back, a guy who knows this sector backwards, told me he saw around $45 as the bottom as that is the point where some mines make a loss, and it will be at a price where some won't want it to go lower.

$50 arrived. Sirocco have gone to 'inventory building', SQM have closed their higher cost mines and have put a hold on expansion plans.

Quite simply if you are on 10k mt and the price drops $5 per kg that's $50 mill in revenue gone and to get that back you would need to increase output by 1000 mt, but at risk of a probable price drop, so it's counter productive.

$50 has been hit but no-one really saw the nitrates issue coming. Sirocco were about to move that way. Algorta do nitrates

The nitrates come out during in the same processes that iodine does, therefore the opex on each is offset by the other. In other words the margin situation has been squeezed on iodine from 2 directions.

SQM in the last 3 years have been predicting big expansion and increased production along with others. We have been saying BS, as the rising costs, lack of water and power will cripple them.

2 years on and hey ho $50 and even the big bully in the industry can't handle the price pressure. It's the complete reverse of their claims they have closed mines and reduced production to protect the price.

29th August 13 SQM conference call

'In terms of the iodine, I think that the market is growing. We will see opportunities, and we will act aggressively in the market as SQM, in related to our position'

Then recently we read they have closed mines and are laying off 400 staff.

They didn't mislead anyone in that line as they said-:

'we will act aggressively in the market as SQM, in related to our position'

However the first part of the sentence wouldn't lead one to conclude that they were about to close mines and lay off staff.

[crazycoops] 04/11/2013 21:30

But there were at least 14 other shares that would have given a better return this year than IOF (so far):



But it ain't over until the fat lady sings :)

[pcjoe] 04/11/2013 20:21

But its only a treble BobbyS!!!! - whinge, whinge - Just think, I could have got circa 2.5% in a nice safe bank account - SG - Its all your fault mate!

[bobbyshilling] 04/11/2013 19:56

Re: the possible relocation of io6 to the io2 site; good bpd, good ppms, and importantly ..... high brine temperatures. Expect a possible delay in commissioning io6, but it will obviously be worth it if they are thinking along those lines. By the way, that is information that they need not have given us yet, but did. Another example of change, should it come about, for shareholder value. On the whole, I don't think we can be disappointed with a trebling of share price in the last year!

[meadow2] 04/11/2013 19:32

A definition of price sensitive information reads, "Information that, if made public, would be likely to have a significant effect on the price of a company's securities. Such information must, in connection with a listed company, be released to the market in a fashion that is fair to all investors".

Increases in the profitability of a company, as we expect from IOF, might not necessarily fall into this definition unless the increases were dramatic and unexpected. IOF has publicly stated the expectation of good progress to all and sundry and are not in breach of AIM rules. IMHO

Most observers are arguing over the extent and results of progress, rather than the secrecy of it.

[worraps] 04/11/2013 18:57

.....So, if 'under the radar', and keeping it under-played is the wise thing to do, and approved of by most long termers here, why did Lance say that the 'Ping' would happen in September, and the cat would be out of the bag from that point, and that from then on, the rest of the world's Iodine producers would be in shock from the revelation. ......And £7 shareprice would be here by Christmas.....remember, superg? You predicted that figure many times.

I am here long term, and am prepared to wait, and have little doubt that £7 will be here possibly within 12 months......but not within the next 8 weeks, as was avidly forecast.

IOF is very exciting as an investment prospect......but I really don't believe I am alone in feeling disappointed with a current shareprice of 178p!

[ramu kumar] 04/11/2013 18:25

eeza, next rns will read as follows.

Nudge, nudge, wink, wink, PIIIIIIIIIng.......LOL

[superg1] 04/11/2013 18:20

Re

'has now been fully commissioned and is ready to accept brine water upon final approval from the well operator'

A few questions have been asked not by me on that subject and the answers I have seen include that brine could flow through within a day or two of the rns, then from elsewhere, that it could be up to speed within a week.

There could be the odd issue, so we'll just have to wait and see.

Seeing the general comments over many months some seek big price rises to satisfy immediate needs for various reasons, including T trade commitments. To me that is trading and there is no justification to comment on timings of rns news or progress. True traders take losses on the chin as part of their strategy, there is no point complaining about it, the decision for short term trades is down to individuals. Long term investors have a completely different approach and are far more relaxed.

Under the radar

I thought some months back that is was an 'excuse' that was wearing thin, but then became aware of the brine lease situation for OK, I explained that In detail recently and if anyone was to talk to IOF on that you would get the same reply, but to give you an idea re a recent comment

'I'm sure you understand the importance of leasing in our core area, and further the importance of keeping such information closely held for competitive purposes'

The answer to that one is yes I do, If I didn't think there was a valid reason for caution, then I'd be singing the same tune as many here.

The fact is rivals were caught taking photo's of io2, I presume to try and unlock the clue to IOF methods that are producing such good results.

At the moment those rivals haven't a clue where they good ppms are, so why give them a clue, when there are more leases to sign off, for future plants next year and beyond. Yes those leases are useless to a competitor as they have no tech, and the patent blocks them, but IOF can't produce either without the lease.

So while there are lucrative leases out there, in various stages of execution, it would be daft to raise flags of where the hotspots are.

An IOF comment a year back showing they don't want to be too open-:

'Due to our backlog of sites, catalogue of extraction agreements and competitive reasons, it is no longer a material event for the Group going forward to announce iodine extraction contracts unless of excessive size'

SQM in their last update wouldn't answer questions on iodine in the conference call for competitive reasons.

I asked why they were secretive about ppm and production at a presentation and the answer was because 'it has hurt them in the past'

If you look at actual comments by various Chile players over the last two years, you will see none of them has achieved what they claimed they would do, and where they would be right now. Basically they are feeding each other BS, to keep each other guessing.

So while it's frustrating for some, it's completing understandable for others. It's all about enhancing long term shareholder value, than answering short term gripes. Just look at the experience of the BOD they have, they will all have experienced the perils of being too open with an apparent 'friend' many times.

I believe there is no PI here, that would like them to be completely open more than I would, tell us all the ppms the bpd, exactly how many sites they have, how many brine leases are complete and how many to go, production and so on.

I recall watching the RB SSL takeover unfold, then the market surprise at the price RB made the move. It was explained the final offer as after receiving extra information.

I'm sure if someone came forward with serious interest, they will have a nasty shock, or pleasant surprise about the potential IOF has.


Many moons back we said io2 was worth 5 to 10 time of io1. It has been mentioned plenty of times that it is about bpd and ppm not the number of plants.

Now all can see io2 is worth 5 to 10 times of io1.

I wager that very few here, if any, can state what the biggest turning point in IOF's history has been............ It was the acquisition of the io2 site, not because it is lucrative and has high ppms, but because of the patent application they had in. In that crazy cheap deal IOF picked up the patent and without it we wouldn't be here having these discussions about OK or Texas, but just Montana, with nowhere near the potential IOF has now.

It's those sort of smart moves that the market completely misses, just like the water discharge permit and USFW rights swap, which at the time wasn't that interesting. Now a few understand the value of that, but it's ignored. In a few years it could potentially be seen as a inspired move. Lawyers thought IOF were nuts trying to pursue it, as it was impossible, well it happened

Those nice folk at IOF took that site off Arysta, with yearly payments at far less a cost than Arysta spent setting it up, and picked up a priceless patent in the process.

The current mode is expanding those leases which all others are oblivious too.

They know exactly what they are doing.

[bones] 04/11/2013 18:17

SIPPs are tax free vehicles as well. There is no tax on income or gains within them.

[the librarian] 04/11/2013 17:35

eeza knows the score here, the price has more than tripled since his targeted exit point of 50p :-)

[crazycoops] 04/11/2013 17:33

Roboben,

I have to disagree with you a little about the way to use ISAs. ISAs are free from CGT, so they are well used as a trading vehicle (or if in drawdown mode, as an income vehicle). On the other hand, non ISA/SIPP shares are subject to CGT, so these are the ones that it is best buy and hold (Buffett style - forever). And if you are making gains on those LTBH shares, sell your CGT free allowance each year and put it into your ISA to build your tax free fund.

No individual advice intended, just a general methodology that I think is tax efficient. It still relies on picking the right shares whether you are holding them long term or trading them.

EDIT - Where this strategy can come unstuck is if there is a cash takeover for your non-ISA/SIPP shares. This said, many takeovers are not solely cash but include some paper such as shares or loan notes.

[crazycoops] 04/11/2013 17:28

eeza,

Management have said they will exit 2013 with an annualised production run rate of 700-1000mt of iodine. If they hit that range then they have met expectations and kept shareholders informed. They have also told us that IO2 is receiving increased brine and that IO3 has been commissioned - it should be sufficient information as long as they remain on track for the specified exit run rate.