Iofina Share Discussion Threads

[crosseyed] 13/12/2013 15:51

PUGUGLY,

The figure for costs of $10-$20 probably originated from broker reports, not figments of superg's imagination.

Here are two and a possible third. I would assume that Investec, as house broker, would have better access to that sort of information.

Investec (see transcript in ):
"More importantly, it is further evidence of Iofina's significant cost advantage - its cash costs of up to $20/kg are around half those in Chile. We maintain our Buy rec and NAV-derived 230p TP."
and
"Given Iofina's cash costs of $10-20/kg (we model $15 in 2014E)..."


First Columbus Report. 7 May 2013:
"Site OpEx of $10-20/kg compares favourably to the industry standard of $20-40/kg and results in site payback of as low as 6 months."
[Note: This report also gives their breakdown of cost calculations used in their forecasts.]


Whitman Howard (see ):
This post just gives summary estimates which imply low costs. Perhaps someone here has a link to the detail of their report.

c

[frog1] 13/12/2013 15:49

2vdm

I believe the technology works and I like the integrated model of being able to add value to a raw material and I like the main product (Iodine) they produce. The information I have at the moment leads me to think on balance they can deliver much of the plan (although this is a nagging uncertainty for me). That will create a very profitable business that will probably be bought and so justifies some risk capital for me. A margin in 1H2013 of over 21% for a company this size with the likely increase in production seems pretty good. The firmer facts on costs for each site and for running the company will only/hopefully come in the results but currently don't look too unreasonable (admin perhaps a little high for the size of company). To justify piling in and increasing my investment by 10 fold I need some more data, like where we are in the roll out, current production and clearer ramp up forecasts. These can be put out in Interim Management Statements

So for me, I think there was a lot in the price for water hence the pull back, but the Iodine/Chemical side was undervalued IF the roll out can be achieved. The consensus here seems to have been, nothing in the price for water, iodine undervalued.

I have been buying today, that action says more what I think than any posts I make.

[readthismessagen0w] 13/12/2013 15:45

2vdm

Give it a couple of weeks, then after the new year get them for a 31 or less mate!

No need to jump in now, you will only let the sellers out who are jumping left right and center. patience is a virtue.

[crazycoops] 13/12/2013 15:38

frog 1, I don't agree that after January they should issue monthly production updates (although that might be appropriate in the future). Quarterly would be fine or looking just at 2014 I would suggest:

- January (EoY exit run rate and build progress)
- March (Pre-close update)
- May (Full year results)
- August (Half year trading update)
- September (Interim results)
- December (pre-close update)

I would then anticipate each plant build that is completed to be RNSd and similarly, with other significant milestones that are achieved during the year such as oil, water, gas.

And I am pleased that we have now had a clear, simple update on the Montana water application.

[2vdm] 13/12/2013 15:31

So frog1 are you saying that the lack of clarity doesn't support the current share price or that it's just too difficult to predict where IOF is heading, until we know more about the costs? Excellent posters here in the main. I'm still trying to work out whether this I should jump in here as a LTH.

[1madmarky] 13/12/2013 15:27

So the water board want more info.... Wow. I would of thought they would be able to do that then it's the 45 days bit then, fingers crossed, we have 80000 bpd of water to sell.

[frog1] 13/12/2013 15:21

Calmar1992 + PUGUGLY,

Both excellent posts. PUGUGLY pre-empted some of my own points, especially the $15 figure and its origin. The interim report is complicated because it only refers to revenue for the group and some references to IOF Chemical as a separate income stream. There is no revenue for Iodine production at this stage. Going forward, for the iodine produced that goes to IOF chemical, the revenue will show up in that department and since there is a value add will increase revenue and hopefully margin. Internally they can show the iodine as a cost to the Chemical and revenue for the iodine producer, but at the group level only inflowing revenue can be shown.

I assume the $15 unit cost is included in Cost of Sales in the interim figures. It is not clear what is included in this but I'm guessing it only includes the cost of the sites and raw materials. That leaves almost $5 million per year admin expenses at current run rate shown in the accounts. This will be for executives and admin staff, web, PR etc and other stuff that the sites refuse to have lumped into COS. Hopefully this will not increase significantly with the number of sites, but is unlikely to go down as the company grows.

Anyway, with the official information from the company to date, I think it is very difficult to produce accurate profit forecasts. Revenue is easier, but will likely be higher than you indicate. Costs are the issue at the moment but I think will be at least $5 million more than you indicate. Also, in the early days I would expect the tax take to be much lower, if not zero. I hope at the next accounts they will break revenue out into Iodine sales and chemical sales.

[readthismessagen0w] 13/12/2013 15:21

Shonny

great call and it proves how great a call it was when the main men behind the ramp start accusing you of all sorts. Well, actually, one of main men decided not to post today? I guess it's for obvious reason and as moderator his prerogative?

I say well done to you and you were indeed spot on. I almost got caught out by the rampers myself but headed your warnings and it saved me a fortune and for that I am great-full for your input!

All the best!

[captain_kurt] 13/12/2013 15:15

Good call H. This will finish over £1.30 today imo

[nellyb] 13/12/2013 15:13

shonny, do you actually put any real money on these share price predictions of yours?

[noujay] 13/12/2013 15:07

Would anybody mind sharing the L2 numbers as they stand plesse

[alwilliamson] 13/12/2013 15:06

Nice 190k buy just gone through. Good businesslike RNS. Keeping it clear and simple.

[hitsha3] 13/12/2013 15:05

So it might take little bit longer but nothing less than that.

[noli] 13/12/2013 15:04

190k buy just gone through, now that shows confidence.

[pugugly] 13/12/2013 15:02

Calmar1992:> Agree your calculations are correct BUT not sure about your unit cost of $15.00. The only source I have for about this figure is the SuperG posts. I have checked the coy accounts and also a limited number of broker notes but have never been able to pin down an exact cost AND remember if the $15 is the cash cost we ahave to add on capital costs, and sustaining capital costs. (possibly could add - your guess 20%+)

NOT deramping just trying to get financial clarity in a peasouper (for the youngsters here that is what they used to call the London fogs when visability could be less than 6 feet (OK 2 metres)

[chesty1] 13/12/2013 15:01

Reason for drop..

[noli] 13/12/2013 14:59

rns out, re water,

[diggulden] 13/12/2013 14:59

RNS OUT

Water Permit

Iofina, specialists in the exploration and production of iodine and iodine specialty chemical derivatives, has received from the Montana Department of Natural Resource Conservation ("DNRC") Water Resources Office, the determination of its water rights application. The determination states that the application did not meet certain criteria set out in state code 85-2-311.

The application will require additional information, primarily with respect to offtake engineering and beneficial use of the water. The additional data required is being reviewed with the Company's retained consultants to enable the Company to respond to the DNRC within the 15 days allowed to schedule a follow up meeting to review the application.

The Montana water project remains a non-core project within the Iofina portfolio of businesses.

[warmsun] 13/12/2013 14:54

Totally agree with that uppompeii, but, in my case a little late... :(

[uppompeii] 13/12/2013 14:50

A good example of no matter ones own belief in a share, never recommend to friends and family!

[shonny] 13/12/2013 14:47

£1.20 at 1630 I reckon. Well on course for £1. I might have to revise this to 90p next week.

[che7win] 13/12/2013 14:46

Calmer,
Correct, hence I say that the current price only includes the first four plants for a P/E of 10 (when the share price was at 150p).

The market has got a bit obsessed with last nights news.

[diggulden] 13/12/2013 14:43

Calmar, calcs are good. Remember you have added no mark up for Iofina Chemical, which is where all the Iodine is going at the moment. I have always worked on 20% margins for IOC products as an average.

[calmar1992] 13/12/2013 14:40

Can we focus just on core iodine because as we don't know for sure about water. Can someone check my calculations? At a price of $45/kg and a cost of $15/kg = profit margin of $30. With io1-3 running at fully capacity plus recycling we should be on at least 600mt rate. $30 x 600 000$18 million = £11.5m - 30% tax = £8m P/e ratio: 15 = 120million. P/E ratio of 25 = 200m. 127m shares in issue. Giving a price of circa £1 for pe of 15 and £1.57 for pe of 25. Within 4 months we will have io4-6. Which are 3 more big plants. Let's say just 200mt each. Meaning an extra 600mt rate by end of Q1 so we can double our calculations. Giving:£2 for pe of 15 and £3 for pe of 25.So in the big scheme of things why does it matter if we are a couple of months late on plants as long as each plant we produce actually works? Even if we only have 10 plants by the end of 2015 that's still a share price many times the multiple of now. If people are holding for the long term then these short term fluctuations shouldn't matter, as long as the long term iodine story doesn't change. Days like today are teaching me a lot.