Iofina Share Discussion Threads

[bazzerp] 12/1/2014 16:02

Interesting Serratia - good to see another JTCod follower.

Is Woodward the company that Superg1 has referred to as being prohibited from expanding in the USA because of their production methods being environmentally unfriendly.

[serratia] 12/1/2014 15:46

Looks like lse are one of the biggest producers - from their web site,

Japan produces about 35% of the world's iodine and Ise Chemicals is one of the top iodine producers in Japan.
We supply iodine to some 20 countries around the world and produce roughly 15% of the world's total output.
Domestically, we supply about 40% of Japan's total output. To meet orders from around the globe, we established a subsidiary, WOODWARD IODINE CORPORATION (WIC), in the state of Oklahoma in the United States. We provide cutting-edge technology to WIC and collaborate with them on producing iodine and natural gas in the United States.
Our ability to export our products from two production centers in Japan and the United States is one of our key strengths.

15% equates to say 4500tpa.

[serratia] 12/1/2014 15:41

On with my search, I came across this site re Oklahoma. The voice clip says there are 3 companies active in Iodine, one I assume is IOF (?). The main company is Woodward Iodine corp who are owned by the Japanese company lse. Their price claims in feb last year seem very optimistic, they claim an output of 900 tpa.

hxxp://stateimpact.npr.org/oklahoma/2013/02/07/oklahoma-americas-iodine-king/

I'll check lse's finances to see how cash rich they are from their results.

[n3tleylucas] 12/1/2014 14:50

Okay bocker1, you say $33m (£20m) ptp FY 2014, I say you'll be lucky to hit £5m ptp FY 2014.

Let's see who's closer.

Save this post rampers.

[bocker01] 12/1/2014 14:45

Adding a few more points to that last post, with presentations around the corner......:

1. Of course, each 100 tons by IOR, the new business, adds USD4.5m to sales and USD3m to profits at sales prices of USD45 per kilo. Production levels for existing plants continue to improve. Year-end IOR sales will run at around 80 tons per month (USD2.5m monthly bottom line impact as op-ex per kilo falls below USD20) with a significant ramp up planned for 2015. Only 2000 tons p.a. equates to USD60m p.a. pre-tax profit.
2. Comprehensive barriers to entry remain water-tight, including gold-plated patent/s/ leases acquired/ knowledge of where to acquire leases. Cap-x per kilo of additional iodine less than 10% of competitors due to revolutionary extraction method.
3. Prices have stabilised since the October 2013 Roskill report which predicted a slight softening in 2014. They are now USD45 to USD55 per kilo. The Roskill report assumed increasing supply from Chile. The opposite has happened. The Chileans have removed around 4500 tonnes of supply primarily from SQM, Sirocco and SCM Bullmine. More supply is expected to come off-stream. The Chilean mining process loses money at USD40 to USD48 selling prices depending on the specific mine. Demand continues to grow at 3.5% p.a. (i.e. 1000 tonnes p.a.) Prices are now expected to increase significantly in the final three quarters of 2014. It is believed that the Chileans seek prices of USD70 to 75 because their costs are escalating and government interference is becoming prohibitively expensive. Sources believe USD65 is believed likely.
4. At USD65 per kilo, Iofina's profits double.
5. IOF's 2014 e.p.s. is 10 based on USD45 per kilo selling prices (bottom end of current price range) and this 2014 e.p.s. is 5 based on USD65. With brine leases in place, IOF production and profits are likely to more than double annually each year for five to six years i.e. triple digit profit growth for many years.
6. Regardless of the outcome of the water hearing, the group's focus is iodine production and processing and will remain so as long as it remains independent.

US presentations round the corner!

[bocker01] 12/1/2014 14:27

With UK presentations on their way:

1. Iofina Chemical (IOC), the original derivatives business, will now be achieving 40% ROS because Iofina's vertically integrated model has slashed base raw material costs by 60% (iodine cost USD50 per kilo bought-in now USD20 per kilo made-in). This saves USD9m per annum, making IOF one of the most profitable quoted niche chemicals businesses globally. Currently operating at only 37.5% of capacity based on minimum expected 2014 sales of USD22m, IOC alone will yield USD8.6m to USD9m of derivatives profit in 2014 after covering all group interest charges (USD1m) and all group administration overheads (USD5m).
2. With interest and admin costs already covered, IOC's ROS (pre-tax profit) on ADDITIONAL SALES (over and above the USD22m) is a storming 63%. Further, with inventory always on-hand and the lowest worldwide cost-base, scope exists for 270% production (and sales) growth in IOC with no further capital expenditure (300 tons to 800 tons). Incredibly, this equates to sales of USD58-60m and pre-tax profit of USD32.9m in the original business.
3. Due to the niche nature of the chemical market, growth probabilities, barriers to entry, technical and cost advantages, the chemical business offers significant share price growth on its own.
4. Not surprisingly, group cash flow is now certainly positive even with cap-x because there has been no cash outlay on bought-in raw materials since last summer. This is due to safety stocks brought forward (to eliminate reliance on Chile whilst own production commenced) and own production at costs USD20 per kilo (falling) which is less than half that of competitors.
5. Prudently, the USD15m loan (reconfirmation only) for the raw iodine production roll out was based on twice projected requirements.
6. Initial raw iodine external sales contracts are to be agreed by Iofina Resources (IOR), the new bulk raw iodine business, over the next few weeks.

US presentations round the corner!

[serratia] 12/1/2014 14:00

I've started to review the competition outside Chile which is ably covered on the board. I found this reference which lists other producers within their countries and capacities. It's an old reference but I'll use it to search the companies.
My question is do any competitors have the fire power to buy out IOF before it gets too large ?

hxxp://minerals.usgs.gov/minerals/pubs/commodity/iodine/iodimyb01.pdf

[engelo] 12/1/2014 12:18

serratio: interesting questions..

Imo Chileans closing mines will have been a mixture of short and long term considerations (eg big spends going forward and many other problems as SG has told us). Reopening would not be easy and would also require strategic thought, not just watching the iodine price. So reactions will be slow. Again imo some of these mines will never reopen.

Meanwhile IOF are only going in 1 direction re production. If iodine prices go up, then they get better revenue which could be used to speed rollout. If they fall, then opp to build market share.

Don't know about other deposits in the world (Except recent list of imports into India showed supply from Turkey, Turkmenistan and Russia) but noone else has IOF's tech and the consequent low Capex/Opex.

[serratia] 12/1/2014 11:52

I was mulling over the same question this weekend. What's best low or higher prices? If prices stay low that could cripple the Chileans but do IOF have the capacity to take up the volume. If the answer is no prices will rise due to supply limitations. Would this lead to a reactivation of Chilean mines or are there other deposits in the world that become economic at say $100/kg.
There's not an easy answer, high prices improves margins but pulls in competition and keeps less efficient producers alive. I guess an answer is to keep prices down to a level where marginal producers fold and hold prices down further as IOF capacity increases gradually removing the competition to the point where you become the largest supplier and can then lead prices.

[superg1] 12/1/2014 10:39

This may sound daft to some, and some may not agree, but personally I would like prices to stay low or go even lower in H1 this year.

The reason behind my thinking is that SQM have made the cuts in staff and closed mines.

Sirocco have suspended operations, and Bullmine must be hanging on by the skin of their teeth.

Depressed prices, would probably mean Sirocco would never return, SQM would stick with their strategy (they already are on a 2 year capex maintenance only path), and Bullmine would probably fold.

I do wonder what affect it would also have on Cosayach after their troubles since 2011. There is not a lot of info around on those at the moment.

I'm thinking of the longer game of course.

[superg1] 12/1/2014 09:44

More on the SQM staff scenario over the last 2 years.

March 2012 to March 2013 the figure only changed by 4.

Q2 13 283 staff gone

Q3 a further 449 staff went .

Total 732

In October reports say a further 400 were to go. So 732 that we know of for Q2 and 3, with Q4 suggested to be that 400 making potentially 1132 gone with 859 gone in H2 of 2013.

SQM in the conference call in November 2013, said they were going to gauge how the market was going before making any decisions on expansion.

One broker spotted the 400 set to go from October on and commented on it. It seems they may have missed the 732 that had already gone by the time the conference call came about.

SQM weren't thinking about it, it seems they were telling porkies.

[sandbag] 12/1/2014 00:24

jakes114,

There's lots of work going on worldwide on batteries for electric vehicles using different types of battery. As yet there doesn't appear to be one type particularly outstanding. The vanadium redox is in the running and the competition between batteries rather reminds me of the competition between VHS and Betamax Video Recorders in the seventies.

[battery] 12/1/2014 00:10

post 14341 jakes114

[jakes114] 11/1/2014 23:15

Has anyone heard about the lithium-iodine battery? If they can design the system to use an external reservoir for the electrolyte then it might be possible to fill an ecar similar to petrol car
and it uses iodine

[superg1] 11/1/2014 21:18

In theory the reduced amount for production should affect the price.

There has been a bit of fun and games between claims of what producers said their plans were, and the actual events we are seeing now.

In fact the report does say from 2011 to 2013 SQM dropped 2000mt of production, but once more I don't think that is the case at all.

That 2000 mt apparent deficit from my understanding, was in part created by the releasing of inventory into the market following the Japan crisis, so a portion of that apparent production was inventory built up. Of course when inventories ran dry, the spot price hit $100 per kg.

[phsycho] 11/1/2014 20:56

thanks SG, info much appreciated. Looking forward to 2014

[superg1] 11/1/2014 20:52

There was a circular last week commenting on the contents, plus a pdf completed late October which included that import export data.

The circular was prompted by the 12 month delayed solar project with Sirocco. General comments were made re Chile ramping up production over the coming years, but that report contained ramped up Sirocco production to 2000 mt.

So you have a circular talking low iodine prices and commenting on the suspended Sirocco but adding comments from Roskill data that has Sirocco adding increasing production to 2000mt.

In that some other high predictions were made for Cosayach which now doesn't seem to be happening.

SCM bullmine do have plans to increase production, but those processes were being pursued on the high prices. They have the highest opex of all.

Algorta remains a mystery. I noted SQM commented they are not so sure Algorta will achieve what they say, and have produced as much as they said they would.

From revenue figures my guesstimate is that Algorta did 1000mt in H1, yet they claim they will do 3000mt this year.

Well if they did 1500mt in H1, they made just under $7 per kg gross profit. However I think they did less than 1500mt.

It all depends what prices some have been selling at, and of course that comment in the ioditech report of substandard iodine not suitable for some products coming out of Chile.

There was a rumour some time back that Algorta had quality issues so maybe it's them, could be someone else, or more than one of course.

[phsycho] 11/1/2014 17:07

sg

Have you had sight of the 2013 Roskill report? I have read your references to it.. just it has a fair price tag on it...

not questioning you old bean.. just wondered as it would be useful research.

[superg1] 11/1/2014 16:49

Oh.... Did I say SQM have closed 2 mines?

Make that 4 :-)

No wonder the grand total of staff lost is 1100 plus.

Must check up what the circs are re the bosses facing fraud allegations.

[orslega] 11/1/2014 12:54

bocker1 - agreed, even as non core, the Water permit assuming granted is a substantial business in its own right.....so authorities dotting i's and crossing t's, properly...as Lance said nearly a year ago, over 3 years of hard work..

28th March 2013 (before IOF reduced its applic...so should be the formalities....of course N Dakota on back burner)

"The Company has secured the sites for the outtake water depot, multiple truck distribution terminals and potential waste water disposal sites in Montana. These terminals will have the ability to fill and receive multiple trucks simultaneously. The Company anticipates filing a similar application in the state of North Dakota in short order.

Commenting on the water project, Lance Baller, CEO and President, stated:

"We are excited to have secured our outtake and water distribution points, letters of intent for water sales and use, and that the Montana Department of Natural Resources & Conservation has confirmed receipt of the water permit application. The Atlantis Water Project represents a significant opportunity
for the Company that has required over three years of hard work to get to this point.

This is a milestone for the Company. Iofina remains focused on becoming a world leader in the production of Iodine and Iodine derivatives, however our non‐core Atlantis water project has robust upside for the Company to maximise the potential of its assets."

hxxp://iofina.com/perch/resources/2013-march-28-water.pdf

[woodpeckers] 11/1/2014 11:52

I wonder if the presentations later this month are one of the "several options to combat the recent bear raid on the stock" that Sam Heuebner told me that they were exploring in his email on the 19th December?

If so, they are presumably convinced that they will be able to present a very bullish case for investment. Perhaps they expect to have more news by then? Does anyone know an exact date for them?

[bocker01] 11/1/2014 11:37

Orslega, the comment "As requested by the State of Montana, and following a review by the Company's retained consultants, the meeting will discuss the engineering design on the water depot and the letters of intent for the water usage" comes from the website (23 December) and clarifies to a limited extent the RNS (13th December) by referring to letters of intent where previously the RNS referred to beneficial use. This is a significantly large water application. Even more so than usual, the authorities are keen to demonstrate that they have reviewed it thoroughly and have not passed it on the nod. For the reasons that you and SG1 make clear, the application is highly likely to pass. Naturally, whether this will happen on 30th January or at a hearing is an open point. However, one thing is certain, procedures do not allow ir to fail on 30th January.

[superg1] 11/1/2014 11:29

Before someone asks

SQM Q 3 report 2013

Staff

As of September 30, 2013 and December 31, 2012, staff was detailed as follows:


Permanent staff

9/30/2013 12/31/2012

4,911 5,643

Since that time reports of 400 more going/mines closing

[superg1] 11/1/2014 11:21

SQM ............... interesting.

Dec 12 to Sept 13 SQM permanent staff dropped by 732 employees.

Mmmmmm they have obviously been very active slashing staff well before they ever announced another 400 to go.

So in fact once those 400 have gone (in theory already started) that will mean over 1100 employees gone.

So if anyone wants evidence that SQM are not expanding, but are cutting back, then I think the figures above, which are FACTS not guesswork, say it all.

Has anyone mentioned that costs of sales v revenue for iodine rose around 7% this year, no doubt the number may go up once Q4 figures are known. On the plant nutrition side (linked to iodine opex) costs of sales v revenue went up by near 10%.



Iodine profits is the biggest profit sector for the