Iofina Share Discussion Threads

[worraps] 21/11/2013 11:15

Lib......I am fully expecting lots of red thumbs down, and criticism about my post 11455, so yours was no surprise.

Superg has posted the best post of the day so far, fully understanding of other's points of view and timescales etc. I totally admire his patience with others less informed, and his kindness and non-judgemental approach to them.

johncsimpson on the other hand could not be more different. He seems to see only his own point of view. He is demeaning of other's and critical of them. Not nice.

[the librarian] 21/11/2013 11:08

LOL worraps, could say pot/kettle not in a nasty way but you do give the impression at times that you want guidance and support, I am glad that I don't perceive, think and behave the way that you do, I would be a nervous wreck. However, that's not to say I don't see your point of view and would not knock it.

[worraps] 21/11/2013 11:00

It's when the spiritual guidance, the moralising lectures on how to think and behave and speak, in fact the whole idea of someone on a bulletin board telling others how they should perceive Iofina and everything about it, ......otherwise they are idiots and out of touch with reality......that's when it gets worrying. Up until then, I was very pleased with yesterday's RNS, and everything about IOF and what it is doing, other than the shareprice which is out of IOF's control. But seriously.....someone telling others that they should think and behave and view things like THEM.....just how BIG is that ego?

[warmsun] 21/11/2013 10:50

great post johnc...how very true...and, lots of it actually very funny!

"They want weekly, if not daily RNSs re everything. They'd actually prefer private emails and / or end of the day phone calls with updates from the CEO."


Made me smile :)

Ahem...okay...better just check my email inbox.................. *











*for the record, I have never emailed the company.

[azalea] 21/11/2013 10:22

A christmas bonus in the offing.

[johncsimpson] 21/11/2013 10:10

:) - Ticked you up iofra . . .

[jointer13] 21/11/2013 10:09

sg
they could not have timed it better.

its all falling into there hands.
nice.

[superg1] 21/11/2013 10:07

Jointer

re


'what this co has achieved up to now,and still achieving is absolutely incredible.'


All down to one guy really.

Atacama/Sirocco took 10/12 years to gain 700/800mt, with big cash in the back and the backing of the huge Lundin group. They even injected an entire mining team from prior successes.

Yet little old IOF, with a very key CEO early on, are set to do it, and potentially set a sector world beater in motion, from a good idea.

I'd like to be George right now, on a performance deal. I'm sure many others would too.

[s0rayad] 21/11/2013 10:00

meanwhile ...from whitman:
SQM (SQM-NYSE)

Q3 results for the Chilean fertiliser, iodine and lithium producer were OK with an annualised return on shareholders' funds of an almost respectable 23.8%.

Revenues and earnings fell in the quarter, resulting in a fall of 9 month earnings to US$1.51 per share (/share) from $1.93/share in 2012.

A $50-70 per tonne fall in the price of potash in the quarter, plus knock on effects on their specialist fertiliser business was the main reason for the decline, but their iodine business also suffered from the entrance of new Chilean competitors.

Lithium sales volumes plunged 20% 9 months on 9 months, but price increases actually allowed revenues to rise 8.9% on 2012.

It is unusual, but owning to these new iodine competitors they are unable to offer guidance for 2014.

Bearing in mind the iodine uncertainty, they might make $2.00/share of earnings in 2013, but how much in 2014? The shares have fallen quite sharply on this news, they were down another 8.5% yesterday, but a 12.5 times prospective earnings multiple still looks expensive.

[superg1] 21/11/2013 09:59

John

Good post.

I can see that the io2 site, is the equivalent of what Atacama/Sir have added over a 10 year period, with funds raised or spent amounting to over $200m in that time.

Clearly the bpd and ppm is high, and they want to put another plant there. IMO that execution more or less covers the targets mentioned. Sticking a date of 31st December on it is irrelevant to me. So if the io2 site is fully exploited, along with io1, then the 700 rate is hit or exceeded, whether that means 31st Dec, Jan the end of Feb or March doesn't matter in the big picture.

SQM conference call today, and let's watch how them um and er over iodine questions.

Yes it would have been great to see the io2 site spelt out yesterday re production, BUT such are the circs and timing, everyone knows io1 is a low production site and io3 just started. It would have been easy to attribute any production rise to io2, and with it being a 50k plus site, it's value would have been easy to identify.

SQM clearly as mentioned in their results, want to know what others are doing, before they make decisions, they more or less stated that (as below). I'm sure under the circs SQM are no longer complacent, and trying to find out who is doing what, so why make it easy for them.

re iodine

"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."


Capital expenditure plans don't include iodine, and there is significant reduction in spending next year. So they are clearly in defence mode and concentrating on operational efficiencies.


Meanwhile the smaller mines plough on, making the same mistake SQM did over the last year or so, but some of those mines don't have deep pockets like SQM. Sirocco have realised, but the disease for them is too far advanced imo, they will need a lot of good fortune to turn that around. It looks set to fold to me, plenty of cash in the bank, but nowhere to go with it.

[jointer13] 21/11/2013 09:39

johnc..fully agree with your rant,some people are just not in the real world.

what this co has achieved up to now,and still achieving is absolutely incredible.
roll on the rollouts.

[iofra] 21/11/2013 09:27

johnc Feeling better now?

[escapetohome] 21/11/2013 08:36

Thanks for the research SG - The only potential fly in the ointment is the macro environment - tapering soon, possible interest raises in the next 2 years, recovery and fears of overheating, these could all act to counterbalance the incredible story here.

[superg1] 21/11/2013 08:08

Thanks crazy

It's just me explaining what I see, and what I view, in relation to any prospect.

It's something I have done in every aspect of employment too, in all things imo if you remain short-sighted, there is no way you can see the road ahead, solutions to problems and so on.

In all things including investing some find it OTT and unnecessary, some think ideas are impossible to achieve, but when someone achieves the impossible the onlookers call it luck. No doubt IOF were lucky to get that discharge permit.

What I see here on the delays, is the knock on effect of a period of indecision when LB fell ill and was absent. George didn't put the orders in or monitor all of that, he arrived well after that would have been done, or not done, as the case may be. The proof of his worth will come in the months ahead well into next year.

The hard work of 'inventing' the tech is done, now all it needs is someone to drive the build phase, which is being done, and once the conveyor belt of plant parts supply runs smoothly, the builds will gather pace.

I personally think a multi-year revenue value of a site is relevant.

If IOF have 5/10 lucrative ones that they want to keep quiet about until all the leases are signed, then who can blame them. Those would be a $750 mill to $1.5 bill multi-year revenue source based on 200mt per site.

[johncsimpson] 21/11/2013 07:59

Agree crazycoops

[crazycoops] 21/11/2013 07:01

superg, #11437 and 11440 are two superb posts - thanks for taking the time to write them.

[bobsworth] 20/11/2013 23:00

Superg1

Thanks for reminding me why I have put all my life savings and SIPP in Iofina. Here as long as Iofina!

[cordone] 20/11/2013 22:32

SG1,Your post 11437 really puts all the 'noise' into perspective. I really value your insight and the hours of work that you put into IOF which you share selflessly

[superg1] 20/11/2013 21:38

Good posts.

It all seems to depend on each individuals target or exit point.

If some planned to exit post io6 then it's a sell now or wait until io6 to sell, if one has no intent of selling post io6, or anywhere near that point, then what difference is a month or two. If you are trading and not holding long term then I see the point.

As shown in that post recently, back in 2000-2002 Atacama minerals claimed they would get to 1440mt in quick time.

In 2013 they have finally got the that point from 720mt. 10 years for under 800mt extra.

They spoke of nitrates back then and still haven't achieved anything on that front.

IOF early on stated they wanted to get to 250mt p.a., they passed that annual rate back in May, but it was seen as a bad thing.

The fact is in just a few short years the picture has changed hugely, way beyond what IOF imagined. They spotted the opportunity in OK while the producer present (Toyota) didn't. Toyota went off to Chile to expand, IOF slipped into OK and are leasing brine under the noses of a multi-billion $ company.
It may have slipped the attention of some, but if Toyota had been sharp thinkers they could have stepped in and did a deal with Arysta. Toyota would then have the patent not IOF.

IOF saw that patent which was crucial. Arysta didn't realise what they had, IOF, or rather, one guy did, and he grabbed it for virtually sod all. If he hadn't we wouldn't be talking about IOF in OK or anywhere else. Just Montana on their 50 ppm and 250mt per year.

I may be wrong, but I don't think many get that.

I doubt many understand the value of the water discharge permit too, combined with the Atlantis water asset. The Bakken boom is expected to last decades, appropriation of water rights won't. Some guys realised how valuable it would be to gain a water discharge permit pre boom, then a rights swap deal on the back of it. All thought of, and in execution before most had even heard of fracking.

What use is a discharge permit and rights swap deal, with no-one wanting water. 4 years on and the relevant area, is the biggest US oil boom for decades, with end users needing water, and authorities temporarily bending rules to service the oil sector.

I think they are highly valuable, as are the iodine lease contracts.

Take one lease 20k bpd at 300ppm for 15 years. Leases are for life. That's a 4000mt iodine source, $50 per kg, a $200m contract, ignoring price rises in 5/10 years.

Imagine io2 at the 50k bpd and 300ppm. that's a 15 year 10,000mt site (85% up time).

Current price makes it a $500m revenue 15 year deal.

Based on that, it seems to me leases are rather valuable. IOF have said they have discovered multiple extremely high ppm sites with some hyper ppm wells. They have plans in place to create units to exploit that.

IOF have identified over 100 sites, and seem to have the O and G contracts to cover them.

In theory they could all be exploited for less than it would cost SQM to build a seawater pipeline.

It's a bloody great story in my book and I'm happy to wait. I have a load of shares on my list that I have been watching for 5 years, most have done sod all or are way down, but great idea's. Where will IOF be in 3/5 years v my watch list.

BMR got slated there for my negative view, then 7p now 2. thought SLE against all the hype would struggle 20p to 35p to 4p now.

Let's see what price IOF is post io6 producing and a water depot, assuming permit awarded, which I have as a given. That could all be done within the next few months with a bit longer for a depot.

[rikivilla] 20/11/2013 21:34

Rockstar - are you Lance?

[crosseyed] 20/11/2013 21:23

Somebody raised the question of how Investec arrived at their valuation of 1.52p/share.

Here is a possible explanation.

Investec postulate as follows:

Valuation. Our assumptions were already more conservative than Iofina's plans.
Our 2014E forecasts (and beyond) only assume an additional four plants per year (vs Iofina's target of 6-8).
So we model a total of 18 plants by end-2016E.
At an iodine price of $50/kg, we estimate each adds $20m of value (10/p share) inclusive of a unit capital cost of $2-3m.
This implies a core, NPV based (12% discount rate) valuation of 152p.
Just a further two plants per year beyond 2016E gives a further uplift of 75p. This underpins our 230p target
price (note we do not include any potential upside from Iofina's Montana water project).

So firstly they determine the NPV of a single plant:
a) Life of 5 years (my assumption - longer would increase the valuation);
b) Iodine price of $50/kg - but implied here is an unstated cost of production giving a netback/kg from which to determine cash inflows;
c) Unstated monthly or annual production, probably assumed to be constant over the life of the plant;
d) An initial capital cost of $2-3 million (let's assume $2 million as that is Iofina's indicated upper range).

What they would deduce is probably a net monthly operating profit for the unit, assumed to be constant. To achieve their $20 million of value with a discount rate of 12% indicates $480,000/mth over 5 years. That could be achieved by, say, 20 mT/month with a netback of $24/kg; alternatively by 16 mT/mth with a netback of $30/kg. The netback range suggested by superg1 at $50/kg less operating costs of $10-$15/kg would be $35-$40/kg, so they might have taken a conservative view. After deducting the initial $2 million of capital costs, that would give the discounted valuation of $20 million or 10p/share.

Investec then posit a total of 18 plants to the end of 2016 with the addition of 4 plants per year, implying 6 producing plants at the start of 2014. Assuming that the new plants come into production at quarterly intervals, and also allowing for administration charges at the current $3 million pa, the cash stream generated gives the figure of 1.52p/share.

I haven't included payable tax in the calculations, but with tax credits and future tax offsets from capital depreciation, it will be some years before they come into play.

Just for fun, let's be a little less conservative. In fact, let's assume:
- production of 20 mT/mth per plant;
- a netback of $30/mT;
- 6 new plants per year, but also assuming just 3 in production at the start of 2014.

which gives:
- Per plant: a NPV12 valuation of $25.4 million per plant or 12.4p/share;
- Enterprise: 219p/share

I should add that these estimates do not incorporate:
- the potential water project;
- the added value from the manufacture of iodine derivatives (it is assumed that the iodine is sold in its mineral form);
- any benefits that might accrue from Iofina's substantial lease rights.

Also, if the NPV12 analysis is made beyond 2016, the valuation is duly uplifted. For example, extending the study to a quite reasonable 5 years (2019) increases the present valuation to 313p/share.

c

[engelo] 20/11/2013 21:12

rogerbridge: "IO3 is a highly automated plant,the first for IOF. There appears to be a learning curve with the programming of software and tuning production.IOF should have gained experience from this so future automated plants should be easier to roll out"

Exactly. Easier, and more automated means cheaper/lower Opex.

I02: first big plant, first on high ppms, first with MidStates. I03: first automated design, first with Chesa. I04/5: first with FRP towers.

All this knowledge and precedent is (or soon will be) in the bank, and imo the next phase of the rollout will get easier and quicker (and potentially see a steeper rise in the production gradient).

Imo there is a minor mystery in that ordering towers ahead means that you have to decide on the spec, and think it's likely that larger towers (remember MAXSORBS?) may be being considered for I07 et seq. Design should be complete by now. Another first, but one I'm looking forward to, and trust the management to have worked this out :-)