Iofina Share Discussion Threads

[che7win] 05/11/2013 16:27

Spike_1 5 Nov'13 - 16:00 - 10582 of 10583 0 0

thanks for your thoughts.

[worraps] 05/11/2013 16:25

Er....cough, splutter.....anyone noticed the shareprice?

[naphar] 05/11/2013 16:18

In all this takeover talk, don't forget about the white knight topic, whatever that meant exactly.

I cannot see a hostile takeover getting through. More than 25% of the shares can stop it,a dn I think they could probably gather that support.

However, someone just trying would have a positive impact on the share price, which would be welcome just now, in the short term at least.

The positive impact on the share price might actually be maintained in IOFs case, even if a hostile approach failed, firstly because it would raise the companies profile, secondly because it might result in further bids, and thirdly because any potential price fall from hostile failure, timing dependent, might be countered by a growth in production and therefore profits.

If a takeover of any kind comes, it comes. It will be accepted or rejected, depending on how good it is. and it will have to be good enough to get the support of the board and close parties to get accepted. i am sure there are quite a few people on here that would follow direction from the BoD on this topic, they know what they have, and we know they know.

No point worrying over something we have no sight or knowledge of right now.

[bobbyshilling] 05/11/2013 16:11

Does'nt this support an 'under the radar stance' by iof?

[che7win] 05/11/2013 16:08

Microcline,
only if they are aware of the potential - an acquirer now will have first mover advantage having done due diligence before others.

So the best chance for a smaller company to acquire IOF is soon.

Otherwise, 6 months+ down the line, the acquirer will be someone with a lot of firepower - it will be a big player, whether it's O&G, Iodine, Dow Chemicals or other. Multiple bids I would expect with the best bid winning.

[spike_1] 05/11/2013 16:00

Thanks Che7 for your comprehensive and reasoned response.

Re - opening books.

If there were to be a hostile bid, IOF could invite offers: IOF's due diligence would establish if potential bidders actually had the ability to raise the necessary cash.

Friendly serious bidders with non-disclosures signed would then get a look inside IOF and figure out how much they were prepared to bid. If more than one bidder, the market would eventually set a value for IOF.

If the bid was lower than IOF's Board were prepared to recommend to shareholders, IOF would have to demonstrate why they believed the value of the company was greater than that offered.

Meanwhile the share price would rapidly reach the amount offered. Beyond that if the IOF were able to persuade shareholders the company was worth 'x', then the share price would move up towards that figure.

Meanwhile, more plants come on stream, more ppm's and bpd are released to the market. The share price continues to climb until such time that an offer is accepted, or rejected by shareholders. If rejected, that bidder cannot bid again for another 6 months. Meanwhile progress continues with more plants.

Take a look at Imagination Technologies: it recently offered $60m to buy a company, that brought out another bidder, and in the end IMG had to pay $100m!

Best wishes - Mike

[microcline] 05/11/2013 15:46

che7win. Wouldn't others in the same boat start a bidding war? Could also attract some O&G firms.

PS to stay below the radar I have a spare bedroom going cheap.

[meadow2] 05/11/2013 15:42

Moonlight flit - perhaps!

[engelo] 05/11/2013 15:36

Change of office is a bit odd, as it last changed only 4 months ago (July 3rd) ;-)

[bobbyshilling] 05/11/2013 15:34

Very interesting che7win!

[che7win] 05/11/2013 15:23

Spike,
my take on things right now.

If (and I say a big IF) we got a takeover now, I'm not sure the acquirer would take a look at the books - what if they launched a hostile takeover direct to shareholders?

By opening the books, they put IOF in play and they would have to be willing to pay an extraordinary amount that would satisfy the directors (unlikely). I mean an amount of £6+, hard to justify to their own shareholders at this stage. I don't think directors would except much less?
Opening the books would mean IOF publishing it's figures to the world (and it's shareholders). The acquirer won't want to do that if they want to launch an opportunistic takeover before IOF get into full flow.

If they wait another 6 months they will have to pay a lot more - in your words " The potential is enormous, but it is just that - potential. Which is why you can buy into IOF at a price that 4 or 5 months from now should be way behind us."

If we were at a much fuller price with 6 plants running then yes - opening up the books makes more sense to me.

My thoughts....what would I do if I were in Sirroco's position right now?
A Blitzkreig manouevre would be my best chance to acquire IOF out of rivals hands, it may be high risk, but nothing compared to the alternative (going bust). I won't give time for my rivals to organise their own funding - instead I will take the market by surprise and go hostile.

Rewind a little...
My margins have already suffered this year with price decreases and I've made significant investments to expand my operations at Aguas Blancas . I have watched Toyota arrive in Chile with their JV with local partners at Algorta. They declared Chile was the only place to be...that was comforting and give me boldness to expand...even with the high costs, labour and lack of water supply.

Now I hear SQM (the largest producer of iodine in the world) are curtailing their expansion plans which worries me as I know I can't compete with SQM's margins. Their production is down...I expect for a reason.

To make matters worse, my advisors have recently put the latest iodine research publication onto my desk....I've discovered that a company called Iofina which I previously wrote off is now producing significant quantities of iodine from it's operation(s) in the US. This source is a result of the fracking boom! It is already having an impact on the USA's iodine output this year.

After investigations, I realise this upstart can produce iodine at $10-$20 per KG, 1/3rd of my own costs.
This company has been promising iodine production for years, but finally they are on the cusp of increasing revenues fast and my investigators are satisfied that the business will be the lowest cost producer in the industry.
Suddenly Iofina's largely ignored noises about becoming the largest iodine producer in the world is becoming reality. The threat is becoming real - they are infiltrating the 'closed' Chilean iodine market that I've been sharing with a few of my rivals for years!

My advisors are saying shocking things to me - they say IOF plants pay for themselves in 4 months! I can't compete with that!
I resign myself to the inevitable conclusion:
My business is suddenly threatened and uncompetitive, it's existence is in question.
Maybe, just maybe I have a *slim* chance of taking them out before the world catches on...that means before IO#2 data is published, after all SQM have an unneeded distraction right now that will hopefully keep their eye off the ball.

I can't afford a takeover war, I just don't have the firepower.

What will I do?

1. First - stop all expansion plans and unnecessary expenditure.

2. Launch a takeover asap. If I can buy IOF out at £4 now, I can get £1 back for the water business, another £1 back for oil/gas/helium prospects and it's only cost me £250m. Cheap as chips, it will also enhance my EPS from next year.

Suddenly I have a future, a very rosy future. The winner takes all.

What would you do? Bust or No1 lowest cost producer in the world and near limitless expansion?

What a prize....

Maybe my mind is running wild with me, but if I were running Iofina right now, I would be staying under the radar...exactly as they're doing.

[bobbyshilling] 05/11/2013 14:59

Thank you Sg.

[superg1] 05/11/2013 14:49

Meadow

I checked the T & C at the time (no exclusions) so yes lol.

Bobby

I'd say just up to speed in an rns for io3, as you say it needs a good run to work out average kg per day. However they could do one for io1 and 2 at some point

[meadow2] 05/11/2013 14:42

And what is the dark secret behind the change in registered office, I ask?

Will this count in the guesses towards how many RSN's before 31st December?

[bobbyshilling] 05/11/2013 14:33

Sg, if that should be the case, do you expect them to give figures regarding mt per day or just to say it is in production? We know of course that it could be receiving brine even now as it was commissioned last week.

[bobbyshilling] 05/11/2013 14:31

. repeat below, sorry.

[superg1] 05/11/2013 14:14

Bobby

I suspect IOF will rns io3 when it's up to speed.

I don't see ppms varying much at SWD's where the bpd is high already as it will be the same wells with the brine supply. Io3 is said to be a high bpd site.

[bobbyshilling] 05/11/2013 14:12

rns out - 0nly registered change in office.

[bobbyshilling] 05/11/2013 13:22

I doubt if any figures will be rns'd for io3, only that it is in production, and maybe not even that will be rns'd. It will take some time for the company to give a "figure" because brine ppms and bpd will be variable from one week to the next, so when the production rns comes for io3, it will be an average over a longer timescale than just a week or so. This is why we have no numbers yet for io2. It might well be that io2 is increasing all the time as bpd have gone up. This is my view as to why no figures yet. But, there is no panic, just logical that they would do this I should think.

It would be no good them giving a figure after a few weeks when it might be likely to change, so an average over time makes more sense. We have the company estimate of 700-1000mt by year end. I don't think they would have announced those figures unless they were (easily) achievable.

[everybodywangchungtonight] 05/11/2013 13:08

don't count on it.

IO3 RNS & chart breaking down right before your eyes !

make your minds up, is it ping or under the radar? you cant have it both ways!

EWCT

[festario] 05/11/2013 12:45

The underlying trend suggests that 170p is the support level, and that still takes us naturally to 200p by Xmas.

[superg1] 05/11/2013 12:20

Have a read of this one. The SQM scandal and court case are now dragging the current president and his party into the mire.

The whole mess has been created by SQM bosses who have been charged with various offences.



"Finance Minister Larraín said the 'Las Cascadas' case won't impact Chile's international reputation," Edwards said during a TVN interview earlier this week. "But that is false. It will most definitely impact Chile's reputation. The whole world is watching this and how it's going to be resolved."

[spike_1] 05/11/2013 12:19

che7win, re: TO at £4. Until IOF have demonstrated they can successfully roll out plants, no one IMO is going to ask to look at the books until they can see what IOF#1-6 is actually producing / capable of producing.

IOF is an AIM co' with little track record behind it. The potential is enormous, but it is just that - potential. Which is why you can buy into IOF at a price that 4 or 5 months from now should be way behind us.

How easy is it to get to and maintain a plant at full production when IOF are not in control of the brine streams? Historically the answer is far from clear. As more plants come on stream, the more stable and reliable the minimum output becomes.

IOF have stated a run rate by year end of 700 - 1,000 mt. They have yet to demonstrate that figure is possible. I think 700 is possible with just IO#1-3. But we won't know that for a few months yet.

Until IOF are producing more than IOC can absorb, and we see excess product being bought by the market, IOF will not be widely seen as disruptive and therefore as a significant threat.

A company Board would rather take-over a successful company, than risk its reputation by taking over an unquantifiable proposition.

All the messages coming out of IOF exude potential success, and to be fair, they have not lied. Yes they are a hostage to fortune on elements outside their control, but most - possibly all - are issues relating to timetable, rather than issues of substance.

Best wishes - Mike

[che7win] 05/11/2013 11:56

Interesting times superg,
Japan is ex-growth, they are relying on recycling which I think is around 30% of their output now.

I wouldn't be surprised if SQM or Toyota are tempted to take us over before we have a chance to show our production figures to the world.