Iofina Share Discussion Threads

[escapetohome] 20/11/2013 10:38

Exit rate as an Upstream term refers to the rate of production of oil and/or gas as of a specified date. Often this will be the projected rate at the next year end.

So Investec say 180 tonne production at year end 2013

Whilst many on this board talk of 700 -1000 mT - million tonne? by what date will they achieve 700 ?

[phoenixs] 20/11/2013 10:34

Scrutable,
I wonder whether you have ever had refurbishments done to your house? I can only say that I have had builders,plumbers,electricians etc doing all sorts of jobs over the years. Have they finished the job on time? Very seldom. Sometimes they don't even turn up. The point I am making is that one can never totally rely on completion schedules, particularly when there is a large demand for the type of product required. If one adds in the vagaries of customs officials and officaldom in general I would have to say that IOF are doing pretty well.

They have said that they will be producing 700-1000mt per annum by the end of the year and in this RNS they have said nothing to the contrary. Therefore, I assume that nothing has changed, otherwise they would have to announce it.

As for other investments that pi's could have made, the world is full of ifs and buts! I for one am okay with the situation. Of course I would have wished for 4,5,and 6 to be built by the year end, but in the greater scheme of things a month or so will make no difference. This is tremendous opportunity to make a great deal of money over the next year or so.

Don't forget the water.

[noli] 20/11/2013 10:32

700 to 1000mt is a 12 month run rate assuming the plants run for a 12 month period, IO# to 6. I.e exit rate for the year.

[iofra] 20/11/2013 10:31

Depends how you calculate the exit rate - last day of the year annualised, last week, last month. Is downtime included?

[escapetohome] 20/11/2013 10:21

Our forecasts assume total output of 180 tonnes of iodine in 2013E (vs 63 tonnes in H1). This still looks achievable, in our view. (INVESTEC)

Why is it being said 700 -1000mT/pa exit rate by some?

I am totally ignorant of this as I never trust figures.

[superg1] 20/11/2013 10:21

Bog

Way back we said SQM don't want to see $45 per kg. As it approached $50, Sirocco went to inventory building, due to be squeezed on prices due to their 12 to 14 week supply time. So they didn't like that price.

SQM dumped old mines and have taken a few 1000mt offline as soon as it approached the $50.

Their recent comments in quarterly results say it all. SQM don't quite know what to do as they don't know what to do, as they haven't a clue how much other mines are doing-:

yesterdays comment-:

"With limited public information available from our competitors, we do not have a clear view on supply growth in the future; it is therefore difficult to give specific guidance relating to our iodine sales volumes for 2014."


I'm sure IOF would have read that last night, but we shouldn't wonder for a minute why IOF don't give out actual figures, ppms and bpd.

I asked re that some time back, the answer was being too open hurt them in the past.

That's more or less the same thing SQM said in a conference call about their own business.

So while some think certain comments re under the radar is not valid, they need to understand what others are doing in the business.

US production has been kept confidential for years. Cosayach don't tell anyone. Sirocco spell it out in detail to the last ppm and look.

Algorta put out some info recently, but their revenue v iodine prices v claimed production don't match by some way.

The Chile folk play the smoke and mirrors game to keep each other guessing. In light of the recent SQM comments, it's obvious why IOF haven't quoted what record production means.

Let's se what SQM say in that conference call tomorrow.

They are the ones sweating with prices around $50 per kg as are Sirocco. I have Algorta at $35 to $40. SCM Bullmine as higher than all of them. Cosayach no idea but it can't be cheap based on the others.

SQM Cos and SCM have plans for seawater which means opex will go up. Sirocco have that on the back-burner as a $50m capex cost.

New Chile gov to take more in taxes off the miners

Meanwhile IOF builds plants for a forecast $10 to $15 opex range. I see absolutely nothing to fear but a lot to be excited about. Yes more exciting if io6 was running now, but I'm not selling post io6 so why worry, it's slipped a bit, as suppliers are struggling to supply towers on time, in the frack boom.

[garfield31] 20/11/2013 10:15

Scrutable it is unfair of your friends to shift personal responsibility for their investment decisions on to you or the board. As the events earlier in the year showed short term expectations can be very dangerous.

[scrutable] 20/11/2013 10:07

What possible advantage is it for the company to hide the actual production figures for another few weeks until they are required to declare them in an end of year Trading Statement, or at the very latest their FY a/cs?

Why should they expect PIs to crack their brains trying to read between the lines and getting it wrong? They should at least have confirmed guidance of
700 -1000mT/pa exit rate to avoid the inference that they are going to fail to make it, and that they are not going to be able to hold the original roll out quantities for 2014. The shortfall in forward plans may not happen. and then in that case they are selling themselves short.

I don't believe for one minute that future expectations are in any way impacted, but the Pis I have recommended IOF to, could have had far better returns from placing hard earned savings elsewhere since the Spring. For these recommendations my name is, for the moment, Mud.

[worraps] 20/11/2013 10:04

Hi, sandbag. Thanks for the empathy, and I wish you a very happy retirement.

I have never felt unhappy with IOF, or it's management......just the shareprice. When you have milestones in life, and the years are passing by, and financial targets and plans to implement, things like expected and projected shareprices really matter, I feel. We are all different, with different ages and lifestyles and responsibilities and visions.

Yes, I have no doubt that Iofina will be a world class company one day, and it's technology the envy of competitors (if there are any left by then)! And until then, we will have to hope we are around to enjoy it in our retirement.

Good luck to you.

[bogg1e] 20/11/2013 10:02

escape, they would have to roll out a few more plants yet to seriously change the demand/supply balance. Once we get beyond 12 plants with eg 3000 ton pa output, it may begin to affect prices, but if some chilean miners are cutting production and IOF can use 1000 tons pa in derivatives, we would need more than 12 plants to start effecting the global iodine price.

[garfield31] 20/11/2013 10:00

Compared to the problems facing exploration companies trying to find rigs to drill in the North Sea the delay in obtaining towers seems fairly minor. Criticism of board is unfair in my view. IOF provides far more information than many other companies I have shares in. At the AGM the board members were very approachable and open. So far as i am concerned they are doing a great job.

[phoenixs] 20/11/2013 09:59

whilst the rns does not inspire, it does give confirmation on IOF1,2,3. Record production is no bad thing and will continue month after month.
Confirmation of water rights will come soon, and I would not be surprised to see institutional buyers taking advantage of the share price to build up holdings.

[superg1] 20/11/2013 09:59

One had an rns yesterday which is what all had been waiting for, it flew and some buyers are now 30% plus down in 24hrs on the great news, which was as expected.

On the SQM results I've been waiting for that to see how the closed mines are affecting production rates, although that part was only recently announced.

Let's not forgot that over the last few years SQM have been screaming about expanding on iodine production. We said here it was BS, as trying to be aggressive on production is counter-productive as the price drops.


Here are there last few years production rates-:


2005 8.1k mt
2006 9.8
2007 9.1
2008 10.5
2009 7.2 (the big market crash)
2010 11.9
2011 12.2 (Includes selling inventory due to Japan crisis)
2012 11k
2013 H1 5k mt


I note they mention a 5.7k mt to 5k mt drop in half year figures, so 700mt less in H1 this year.

Iodine revenues this year-:

Q1 148m
Q2 108m
Q3 104m

Going on recent rates of $50 to $55 per kg, the Q3 figure gives around 2000mt at $51 per kg.

So on Q3 figures a suggestion of an 8000mt p.a. rate. A yearly rate of a 3000mt drop since 2011


The thoughts were that SQM had gone on the defence taking 2 to 3k mt offline and closing expansive mines. Then news was found that they had closed mines and were laying off 400 staff. The figures above show the result to some degree.

Those figures don't include what SQM may have stockpiled in the inventory, so they may have produced more, but then if I use a $55 rate the level drops.

Overall is a good guide to show that SQM have dropped production, in response to other Chile folk increasing production. They don't hide it, they spell it out.

They are clearly trying to protect the price. If they were in a strong position on opex, they could simply increase production and wipe the smaller mines out, but they haven't. They have done the reverse of what they forecast, and have done exactly what we predicted. Although I have to admit, their weakness is greater than I thought it would be.

Next comes the new gov with higher taxes on miners, with a delivering IOF adding to the pain.

SQM seem to be ahead of the other Chile players though on the thought process. SQM seem to be in a big efficiency drive to get costs down (as in results), I think the smaller mines haven't got to grips with that yet. having chased the boom, and it will catch them out.

They are going for higher yielding mines at lower production rate and lower costs. Logic really in any industry, but Chile doesn't yet realise yet the full threat of the US iodine resource. They have had it all their own way for years, but that will change over the next few years in a big way.

That's why I'm in IOF long term, not for io5 6 or io x. Water and the rest is a great bonus.

If the situation changes drastically in Chile for the better, then I may have to reconsider. But as the gov predicts it's going to get worse, and over a decade to fix, then I have no need to worry.

[escapetohome] 20/11/2013 09:57

I am beginning to think that perhaps it is unwise to suddenly have 6 plants worth of new iodine supply for the market, can the delicate iodine market accept such a large new supply without disruption and price correction ?

Maybe gradually introducing the plants is the strategy, and perhaps that is the reason for the apparent 'construction delay'

[sandbag] 20/11/2013 09:53

WRT Tanks:

If a manufacturer has been manufacturing FRP tanks for a certain number of drilling companies over a period of time and look like they will continue for some time due to the drilling boom little johnny come lately IOF can't exert any time pressure on the manufacturer. They have to stand in line or find a manufacturer who will accept a higher price to give IOF priority but risk upsetting their regular customers.

[bobsworth] 20/11/2013 09:50

Nice record breaking RNS from Iofina!

Give or take a week or two, todays RNS confirms that Iofina are on track with their Iodine plant roll out and year end production target which is very very impressive on 3 plants, all ofwhich continue to improve on record outputs.

Looking forward now to confirmation that IOF-6 is to be relocated to the IOF-2 site which should with existing on site facilities speed up plant roll out.

For the icing on the christmas cake all we need now before year end is the granting of the Montana 80,000 bpd water rights subject to public appeal.

[azalea] 20/11/2013 09:48

A significant recovery play. 2014 and beyond should see IOF showing its paces.

[che7win] 20/11/2013 09:46

I have said patience is required here.

I am disappointed with today's announcement but they previously flagged that they were going to order spare towers for the very reason for the delays today.

Playsbryns two posts hit the nail on the head today, here is one:

"Plasybryn 20 Nov'13 - 08:19 - 11306 of 11332 1 0

Some of us said months ago that the roll out program wouldn't be delivered and for some reason the Mgmt didn't have the balls to admit it. It was obvious from the lack of progress during the year. If we could see, surely they knew it.

I have bought back in about a month ago, because I am happy with the roll out program, just not happy with the Mgmt who seem frightened to tell the truth."


I previously sent an email to the new management, part of their reply I posted last night.

In that email, I sent the following:

"Dear Sir/Madam,
What the market for quoted companies expects to see above all else is that financial and operational forecasts/targets are consistently hit, and where this is not the case appropriate, timely and effective action taken to demonstrate management accountability.

The market needs to see the operational side of the company set realistic but challenging targets and deadlines for the plant rollout.

I realize that there have been unforeseen situations, but the market expects that any resulting project timeline delays or production shortfalls should always be the exception not the norm.

If the new CEO can reach or exceed the publicly announced rollout plan then I'm sure the share price will respond."

They responded with the below comment:
" Your comments on delivery to expectations is well noted. I appreciate your input and share your views".


I understand clearly why the new management since coming on board set expectations on iodine production and not plants in operation. They also set that expectation realistically and will be held accountable to that.

What they didn't set is how many plants they would have by year end, that was Dr Fay and previously managements legacy.

If we could see a chart of iodine production over this year, it would be lumpy due to only two plants operating, but the trend would be rising. There would be a step change since IO#2 started receiving 50k Bpd in the past couple of months with another step change from this month.
The trend would be showing rising and accelerating iodine production.

This company is in the ascendency, we could have 3 or 4 plants commissioned in the next quarter, but as others say, the rise in production will be relentless.

They will get better at the roll outs, I've no doubt on that.

I don't think most shareholders realise the new management intend to under promise and over deliver.
I don't hold them accountable for the plants expectations but will for the iodine production.

I hope shareholders understand the new stance from recent management, I expect better management of expectations from here on.

[noli] 20/11/2013 09:40

If you look at iof over the last 11 months, its been a great year. If you break down the year we started with titanium plants, then the iof plan changed once the tenders were recieved as frp plants are much cheaper than titanium, which means more plants for the same money and quicker delivery times. Its a shame the frp tower builder is so busy and can not deliver on schedule to what they must have said to iof on tender doc. Now GL gets the brunt of stones thrown at him for missing targets when infact it was the frp tower builder, iof must have issued guidence on what they were told from the frp plant & tower builders.

Iof have tried to sort the issue out by ordering an extra set of towers that were in customs, but its just a waiting game now.

Water has been applied for and rights of way applied for, we are nearing the end game on that. When you look back it really has been a great step forward and millions will be added in revenue in quick time.

We are in a great place at the moment and especially when these other producers are struggling and reducing mt pa. Iof is adding and will continue to do so as we move forward.

[shonny] 20/11/2013 09:39

Repeatedly missing targets is the trademark of a pie in the sky jam tomorrow Company. This one certainly fits the bill.

[beills] 20/11/2013 09:32

Has anyone done the calcs to reconcile what production rate Investec are using to arrive at a 10p per plant incremental share price valuation?

[the librarian] 20/11/2013 09:30

Ahhh, a good solid SHONNY post always brightens my day, glad tidings of comfort and joy etc; :-) (it's like a tic that just has to happen).

I was hoping that you would interject sandbag, always a common sense approach that is appreciated.

[superg1] 20/11/2013 09:28

Re towers

This seems to be the general hold up. For anyone that attended the presentation one of the BOD (I think CF) pointed out that the US is in a boom in that industry due to the frack boom. The FRP firms will be flat out producing tanks and towers for various customers in the Oil sector. That was explained as the reason for slips in supplies. Clearly IOF are going to order towers early for the later stage io's.

Nice to see what the actual io3 hold up was, integration of software, with the partner on automation.

2vdm

It's not easy but the key points are-:

Iodine is in a multitude of products, from your computer screen to your Tuna sandwich. There are no alternatives in many cases and it can not be synthetically made.

Over the last decade or so demand has risen about 3.5% p.a.

Iodine is scarce in terms of commercial resources. Japan some time back were the number 1, but there resource is in slow decline.

Japanese firms are in the US, but their use of harsh chemicals and end products, led the US to ban the tech for new sites or increased production.

Toyota Tsusho who are in Oklahoma thought the only place left to produce iodine is Chile, so they joined up with Algorta Norte.

Meanwhile IOF went on the hunt in the US with ground-breaking tech, with low emissions. They have multiple contracts with big O and G companies.
Oklahoma is rich in iodine. Iofina have identified over 100 sites where they can put plants. They have identified sites where 19000mt can be produced p.a.

Chile supply about 60% of the world's iodine so more or less control the price.
When the Japan earthquake came the iodine price shot up form $25 per kg to over $100 due to shortages. SQM sold their inventory and other small mines in Chile threw cash at it to join the boom.

The price has tracked back as things have settled down.

Chile capex and opex has rocketed in recent years, with no way back due to lack of power and water, plus rising costs. The mines are in the Atacama desert, the driest place in the world and they need a lot of water.
Opex for some is $35 to $40 per kg, and this can be seen in results. The odd mine is higher.
For some they need to spend big on seawater pipelines which puts up capex and opex.

So if any move to seawater (they will have too at some point) then opex goes up.

IOF forecast opex in the $10 to $15 range per kg which will make them the lowest cost producer anywhere.

As the iodine price has reached near $50 per kg, even the biggest producer has pulled back on production to protect the price. Ioditech report that some mines have 'managed to stay open' at these prices.

IOF are in the roll out, and obviously there is no way for Chile to compete on prices. The US imports around 6000mt of iodine per year and will soon have a major producer in their back yard.

IOF have a chem div that produces it's own derivatives, I believe they use around 300 to 400mt per year currently.

So that sums it up from a lot of research. Chile capex and opex has been on a steep rise. Check out the recent Barrick mining news. from concept to completion a mine plan went form around $1 bill capex to over $10 bill, so they binned the idea. There are plenty of other examples. OR just look at the SQM share chart to see how tough it has been for Chile.

IOF water (Atlantis water solutions) is relevant too as it could mean revenue in H1 next year.

The water permit is progressing well I understand.

Forgo to mention. IOF have a patent protecting the business model, there is no tech to use in the US, but even if someone comes up with it, they are stuffed re the iodine extraction models.

E.G. for OK I have IOF as contracted in for over 2 million acres of land, going by the partners they have.

[garfield31] 20/11/2013 09:27

Very positive RNS for long term investors. Bodes well for future once some more plants are in place and board able to give more information on production. This is quite apart from the "extras".

[shonny] 20/11/2013 09:20

This will be much cheaper by Xmas. Only a mug would buy today. The wheels are fast coming of the £2 by Xmas wagon as predicted. Over promising and under delivering is a classic sign of bad management. £1.30 by 31st December I reckon.