Iofina Share Discussion Threads

[che7win] 15/11/2013 08:13

Looks like we are heading up from here.

It also appears that we are following the uptrend that started from the bottom in August.

[superg1] 15/11/2013 07:49

Nixon

I agree with ammons on that one.

If you plan is to be the lowest capex/opex operator by far, then there is no need for any defensive moves, other than keeping quiet about what you have in the early stages.

I was thinking about capex needed for a new Chile set up to for 2000mt.

Recent examples already exist, such as Algorta and Sirocco.

From rough figures I recall I think Algorta were around the $150m plus mark.

I keep meaning to look up full costs for Sirocco and suspect it will be around that figure or greater.

One is going over the 2000mt mark not and one on 1500. Both with opex of $35 plus per kg.

With $150m I IOF could do 70 plus plants. 200mt per plant 14000 mt at opex under $15 per kg.

Two large companies in recent times sought to get into iodine on the back of the Chile route, Lundin and Toyota Tsusho. They won't be the last, but if there is a much cheaper option that Chile, with far better returns, better infrastructure, with a domestic market importing near 6000 mt.

What they found is that it was far tougher than they thought. More importantly when they had the idea the costs were not too onerous, but in the development stage they took off, seawater needed in some cases, rising wages, high power costs etc.

Barrick is a recent example for all to see. The actual costs involved from idea to execution went 10 fold. Thus they recently abandoned the whole idea, having spent a few billion.


IOF will be the hunted imo not the hunter. Although I would imagine smaller chemical divisions with similar product lines, may be looking at iofina chemical and worrying about there own business, as they would not be able to compete on prices for iodine related products. There is a very long list of products that iodine related chemicals are used in, E.G paint and other types of coatings.

[ammons] 15/11/2013 07:26

Taking over the opposition?

What for?

[meadow2] 15/11/2013 07:21

nixonpaul - An interesting thought, but let's walk before we start running!

[nixonpaul] 15/11/2013 00:23

Anybody thought about rather than IOF being a TO target, in the not too distant future IOF could be taking over the opposition.
With all the prospects becoming a reality this is not unrealistic.
Quite the opposite of a lot of PI's current hopeful expectations.

[superg1] 14/11/2013 20:54

A very useful read Rug and it clearly shows any io2 messing around was all to do with Mid-states trying to get their infrastructure in place. They comment of being just about where they want to be. In that timeframe the io2 site is up to 50k bpd, which confirms what Mid-states have said.

[rugrat2] 14/11/2013 19:43

MidStates Q3 Earnings call transcript:



Some impressive progress being made by MidStates - worth a read.

[monts12] 14/11/2013 19:39

SG
I think the current market cap is too low (low PE being applied) and is still attractive but you may be right in that AIM takeover rules would force added value on currently invisible agreements/contracts etc.
I think we're on the same page regarding the eventual outcome :-)

[superg1] 14/11/2013 19:31

Monts

I'm of the thought that the defence tactic of taking out IOF has long gone. Now it is too expensive to do so. The likely event would be for an acquirer to use the position to dominate the market.

If the IOF business plan for multiple plants is laid out and achievable at the opex levels they suggest, then at some point in time, other iodine producers are likely to go out of business.

As ioditech put it in their last report-:

'Plus all the small mining companies have managed to stay open even as prices have fallen'

That was on 4th September and a period where cash coming in was at higher prices than on Sept 4th. They have squeezed down some more since then, so I would imagine current prices are very painful for those small mines.

[dcgray21] 14/11/2013 18:46

Escape - if we believe ourselves to be the highest margin game in town , doesn't that naturally offer some protection from potential price variations ?

[escapetohome] 14/11/2013 17:47

Agreed Chezza

Not so sure though about such a high PE though of 25+. The market will apply a high PE if the revenue and growth is stable and assured , but surely a part of that is dependant on third party supply of brine, as we found out and other factors.

Risks abound - Challenge to the cartel pricing approach - that old cartel that led to supply price stability - yes by IOF itself - and what would happen if the price became more variable and the cartel broken - without a takeover of IOF?

Thats why I say - I will be very happy indeed with a price of £2 by Christmas and satified with a price of £1.70.

[che7win] 14/11/2013 15:43

superg,
yes it's a strange one.

I would expect management will release an operational update here every month or so.

I would like to hear how IO#1 and #2 are doing, IO#3 should be up and running, what is the status of IO#4? I guess we hear that when it is completed which should be anytime.

IO#5 should be in build phase also.

Plenty of news to come.

[crosseyed] 14/11/2013 15:40

superg1/bogg1e,

Thanks for your replies. I'm feeling more confident in the model assumptions.

c

[n3tleylucas] 14/11/2013 15:35

It's a funny old game.

Isn't tit

[superg1] 14/11/2013 15:31

Boggle

I think you mean 250mt per plant rather than 250ppm.

Che

yep it identifies that some high fliers are so far off revenues and progress that failure and setbacks can't exist.

E.G. If share X has a contract with partner Y to produce Z in Q1 2015, it's unlikely that any rns now would state a delay to Q3 2015.

If it got to Q4 2015 and they did that (9 months instead of 3), then the share price would probably fall way below where it is at present when the actual is 12/15 months away.

It's a funny old game.

A few I know of are doing very well with high MC's, I can't see them meeting their timelines, but while that risk is so far off, everyone is happy on high prices.

[superg1] 14/11/2013 15:18

Crosseyed

IOF have made plenty of references to future opex guidance of $10 to $15 per kg as they move forward.

For contracts with those in the O and G sector I'd work on about 10% royalties, that was from a comment post early presentations, some could be fixed fee deals

For OK there would be extra royalties re brine leases with landowners. from reading mineral forum sites, 6% seems to be a guide.

BUT I don't think those fees are based on the relevant iodine price at the time, and may relate to long running, what I'll call for now as, 'going rates'.

Shares magazine and proactive investors mention $10 to $20 opex.

I think First Columbus mentioned $10 to $15.

IOF mention a forecast of being the lowest cost producer in the business.

In Japan they do it far cheaper than in Chile via a brine extraction model. Trouble is that resource is in decline and demand is going up.

[bogg1e] 14/11/2013 15:14

crosseyed, the previous guide for IO1-6 was 250 PPM (I think), which must be an average, i also assume that 30k bpd is the target volume each plant will be expected to eventually operate at. Im basing my future revenue calculations on this sort of average above, but each plant will be different, and im disappointed that IOF have not been more forthcoming with ppms and bpds per plant so we can break down value more precisely. I think though that we will have surprises on the upside as plants come online or existing plants are augmented by a secondary plant or pods.

[che7win] 14/11/2013 15:10

dcgray,
yes, agreed.

Sorry for O/T TPL execution on production has been poor (the annual accounts show how much), but their deal making is excellent. I believe the production side has been held back by lack of cash up to this stage but things look good from here on.

This shows the true picture - if one of these shares was taken over, I would immediately be looking to top up in the other one at current prices.

I think we will both be rewarded in these two companies.

[n3tleylucas] 14/11/2013 15:07

"I have just shifted my pension to a SIPP and recently topped up aggressively"



The docks
the clocks
a whisper woke him up
the smell of water
would resume.
the cave
the waves
of light the unreal night.
that flat curving
of a room.

Prove it... just the facts... the confidential
This case, this case, this case that i...
i've been workin' on so long...

first you creep
then you leap
up about a hundred feet
yet you're in so deep
you could write the Book.
Chirpchirp
the birds
they're giving you the words
The world is just a feeling
you undertook.
Remember?

Now the rose
it slows
you in such colorless clothes
Fantastic! You lose your sense of human.
Project
Protect
It's warm and it's calm and it's perfect
It's too "too too"
to put a finger on
This case is closed.



hic!

[dcgray21] 14/11/2013 15:04

che7win - That is where you can seek solace . Back your belief and accumulate . I have just shifted my pension to a SIPP and recently topped up aggressively into IOF / TPL on the logic you highlight above . I'm convinced we will look back in 2-3 years and be thankful we did so . Anyway TPL Q results out tonight post Canada close I believe so lets see what that brings .