Iofina Share Discussion Threads

[killerbudgie] 22/1/2014 14:00

Teh share price has been bouncing around this 100p mark since it recovered after the RNS in December. I expect it will keep this up until we get news. The market didn't seem interested in Investec's ideas, why would it be about Numis? The market will respond to earnings and production. IMVHO of course.

[n3tleylucas] 22/1/2014 13:59

Bogg1e,

If Numis is saying 13p eps 2014 (that right???) then that's a clean £16m from est £24m turnover!

You'll do well to make a clean £5m.

Hope the next profit warning isn't as tardy as the last one.

But believe you me, you won't make anywhere near £16m profit FY 2014.

The market already disbelieves Numis, disastrous debut note.

[shroder] 22/1/2014 13:52

Good to have a note out with some detail, very helpful

I found this quote to be a bit of an oxymoron - correct me if I am wrong, but 3.5% is down from previous estimates of 5%?

"Iodine supplied in to high growth end markets: We estimate global Iodine demand to grow at c.3.5%pa, in-line with historic annual growth rates"

My only concern here long term is the actual underlying market for iodine and ultimately iodine prices.

The arguments for various operations suspending production in Chile is certainly possible, but I do wonder if oversupply is a contributory factor too.

Although CES this year featured many LCD (some bendable) screens they were in the minority compared to other technologies.

On the water permit front, DNRC were kind enough to supply a very detailed and exhaustive response. That said, it probably only makes sense to those experienced in such matters with no definitive conclusion being drawn by the casual reader.

[bogg1e] 22/1/2014 13:46

The market was disappointed by delays in production and so the share price fell. Conversely, production updates with IO4 and 5 will boost the share price In 3 to 4 weeks we will have two more plants commissioning, which still means iodine production, just not yet optimized. Then the market will take interest again. Thereafter the plant build should be more manageable, predictable and will definitely yield £3 by year end no problem. Given that the broker stated 13p eps by year end 2014, £3 is a reasonable p/e of about 25, with confidence restored in productivity and the future roll out, a p/e of 25 is rather conservative.

[shonny] 22/1/2014 13:36

Oh dear. Looks like the market is unimpressed by the broker note. What a shame.

[bogg1e] 22/1/2014 13:34

Writz agreed. But the note suggests they don't have the two confused. Perhaps 80k is due to water regulations; a standard extraction limit per permit?

[superg1] 22/1/2014 13:31

Writz

No, they specifically talk about gas drilling in Montana restricted due to the lack of water, and quote ambient prices, plus warm formation water prices.

The only way it could stay warm would be for supply near to Atlantis. Gas drilling is nearby around the bear paw uplift

The only way direct supply from Atlantis to the eastern Montana area is financially viable, is through use of water discharge (discharge permit) into the river system.


It could be just a comment IOF made and Numis took it as a serious consideration, or that there is something with more substance to justify it's inclusion.

It is entirely separate to the water permit and discharge permit (in relation to warm water).

Although interestingly, as mentioned, the production potential matches the first water permit rate. In other words, permit or not they can produce 80k bpd, clean it, put it in the river, and extract it lower down as they own that water, once they have taken it out of the gas aquifer.

In that scenario maybe they could even just sell the right to 80k bpd, and let someone else take it out.

Don't confuse it with the USFW rights swap either, I note that didn't get a mention.

[writz] 22/1/2014 13:08

freshvoice, we wrote those entries simultaneously. I'm getting worried about this telepathy thing.

[writz] 22/1/2014 13:06

Just speculation, SG, but I wonder if there isn't an indirect connection with the water application - perhaps to substantiate the case for beneficial use. The 80K is an odd coincidence.

[che7win] 22/1/2014 13:03

Superg1:

Atlantis:

1. Extract gas from water
2. Extract iodine from water
3. Supply water to O&G
4. Get brine water back, extract iodine.

LOL, I know it won't be like that, just an amusing thought.

Atlantis has many opportunities.

[freshvoice] 22/1/2014 13:03

Does it figure in some way into the meeting on 30th?
Can't see how unless Numis have not got the handle on this water thing.
Funny 80k is in both statements, coincidence or error?

[superg1] 22/1/2014 12:55

che

The more I think about it the more weird that comment potentially becomes.

They have gas levels, including the Niobara, potential oil levels, Helium as we know is there and may play a small part in the future, but warm formation water for gas fracking, has never been mentioned at any point.

Much of the IOF long term potential is missing in the note for obvious reasons, so why the warm formation water comment far gas drillers in Montana, out of the blue?

In theory there is only one reason for it to legitimately be in there, and that's because it's current and relevant, yet it is news to us.

[n3tleylucas] 22/1/2014 12:46

I can see Numis's rev ests for 2014 & 15, are there any profit ests?

[n3tleylucas] 22/1/2014 12:39

"Good to see our nominated Adviser doing it's job by advising and educating the market and opening its eyes to Iofina's potential."

Eyes opened, shares fall.

[che7win] 22/1/2014 12:37

Yes, Atlantis with its ambient water temperature, that's a whole new angle for me, I'll be interested to see if this develops into a revenue stream.

[postman_pat] 22/1/2014 12:29

Good to see our nominated Adviser doing it's job by advising and educating the market and opening its eyes to Iofina's potential.

[superg1] 22/1/2014 12:15

Yes Che

They have even added in (warm water) after the formation water comment.

We know in recent years the fracking industry prefers warm water as they get better results, hence water heating industries are building on the back of that.

The note is the first ever mention I have seen of that, and it's something I had not even thought of re warm water supply, heated for free by geology.

Does that suggest someone nearby is to start fracking gas wells, near to Atlantis?.

An option that wasn't really available as the Fresno area is a scarce water area.

Personally I would like an answer one way or the other, what that comment is all about

[che7win] 22/1/2014 12:06

The Atlantis Field is also the largest source of iodine in the US, intriguing it gets so much attention...

[superg1] 22/1/2014 11:59

The full comment

Atlantis water project
The Atlantis water project is a non-core opportunity for Iofina Resources, which offers additional upside for the company to maximise the potential of its assets in Montana.
The Atlantis Field is located in Montana between two of the most significant biogenic gas fields in North America. Sitting on a major aquifer with c.35 billion barrels of water, this field can only be produced in conjunction with large volumes of formation water (warm water). Incidentally, the oil and gas industry has previously struggled to commercialise gas discoveries in the area due to a lack of water to supply the industry.

Thus, this offers the state of Montana an opportunity to kick-start its fracking industry. This field has the potential to produce up to 80,000 bpd of water, which Iofina believes can be sold for c.$1-2 per barrel at ambient temperature, rising to c.$4-6 per barrel for warm formation water.

Iofina Resources currently holds the lease rights to produce iodine, co-produced water and natural gas at the Atlantis Field. In addition, the company owns 34 wells and a pipeline which links its operations to the TransCanada pipeline system, and has subsequently secured the sites for an out-take water depot, multiple truck distribution terminals and potential waste water disposal sites in Montana.
In March 2013, the company submitted a water application permit for a maximum flow rate of 80,000 bwpd from the Missouri River in Roosevelt County Montana for the purpose of industrial use. Since then Iofina has received notification that the application submitted requires additional information, primarily with respect to the engineering design of the water depot and the intent of the water usage. A meeting has now been set to review the company's water rights application with the regulators on 30 January 2014.

[superg1] 22/1/2014 11:56

Those water comments are a complete mystery. If not relevant near term they shouldn't have been in there.

I can't recall seeing anywhere in IOF history about the direct supply of warm formation water, to the gas drillers.

They have come up with an 80k bpd capacity too, which adds more to the mystery.

I had seen that as a potential future event if fracking migrated close to or on IOF's land, as it is a scarce water area. The formation water is suitable for fracking use. However imo the oil boom would take a few years to migrate across, if at all, so I've been purely thinking along the lines of water discharge into rivers, post clean up, for extraction further down.

BUT............ they are not talking oil, they are talking gas drilling in the area, which is close to IOF's acreage.

So either a comment that should never have been in there as it's way into the future, OR a slip of information re something current, that should never have been in there.

'the oil and gas industry has previously struggled to commercialise gas discoveries in the area due to a lack of water to supply the industry.
Thus, this offers the state of Montana an opportunity to kick-start its fracking industry'

I do quite a bit of IOF digging, and I've never seen any mention of use of formation water before.

[bogg1e] 22/1/2014 11:54

Che lets hope. I don't have them down for 3 this year even though that is the companies intention. They still have to build, then run and test and customise and tweak. I assume the mobiles will be no different to the plants in that respect, but if they get just one out, fully optimised with proven stable production I will be happy. Given that a mobile unit is one 5th the cost of a plant, once they are happy with the design i then expect to see a faster roll out of the mobile units.

[che7win] 22/1/2014 11:48

Bogg1e,
There will be mobile units on top of that.

[bogg1e] 22/1/2014 11:43

with 2013 eps of 7p we are currently on a p/e of about 14. Thats very low for a company with this much growth ahead. Also 12 plants by end 2015 is too conservative, that implies 3 new plants this year (IO7-9) and 3 plants next year (IO10-12), I'm sure they will build more than that.

Thanks for posting the note btw chaps. Much appreciated.

[captain_kurt] 22/1/2014 11:14

Agreed tsmith. Happy with the buy note and the considerable upside here.

[bobsworth] 22/1/2014 11:11

Nice Summary.

Best bit is near doubling of revenues every year "we expect revenues to grow from $18.8m FY13 to $39.9m FY14 and $60.4m in FY15"

Refreshing with lots of icing on the cake to come:
Water Rights
Mobile Units
Significant growth in its Chemical Division
Prilling tower's