Iofina Share Discussion Threads

[che7win] 12/3/2014 11:45

Poundland that I mentioned earlier now up 25%, what a crazy overheated market.


Edit, make that 33%.

[superg1] 12/3/2014 11:45

I can't get the full link title, but if you search on this it lists the pdf document

Sara Larrain and Colombina Schaeffer chile water

The doc title is 'Conflicts over water in Chile

Produced in 2011 by Canadians. Canada are huge investors in Chile

It's worth a read, as you will see they have been right, and that the situation is going to get a whole lot worse.

Not only is the 150 litres per second rule looking like coming in, but there are other factors like in this link.




Basically Chile has been, and is heading for, complete disaster re fresh water.

[freshvoice] 12/3/2014 11:21

Hardly any trades, does that mean all the Somerset crew are at the races?

[superg1] 12/3/2014 10:34

That question to SQM (from Seeking Alpha)

What made me laugh (not shown) was when Ben replied 'That is very helpful' REALLY Ben that answer was helpful, he shouldn't be so polite next time, he had a great point.

It looks like an 'um er' BS answer to me, and doesn't make a lot of sense.

So as the lowest cost producer and we are happy to let high cost producers take customers away from. A great idea to lower revenues and profits. when there is no need. But as in previous posts, the old mines were too high cost, so they had to dump them and the customer base, to become cost efficient.

Scotiabank.
Ben Isaacson - Scotiabank Global Banking and Markets, Research Division
I have several questions. The first one is on iodine. You stated that you are prepared to fight for long-term market share, but I think it's apparent that you've actually been giving up some market share by cutting back on your volumes. So can you just kind of discuss what your strategy is right now? I mean, why not cut the price and kind of ramp up your volume and kind of get back that market share and kind of clean up this industry a little bit.

Patricio G. Contesse - Chief Executive Officer and President
Well, I think, what I said is exactly what we're trying to do. Of course, we see this [indiscernible] you suggest that was to evaluate and we decided in the long term not to go [ph] back, as you said, more gradually. And that's what we're doing even though we can lose some further market share. But we think in the net present value [indiscernible] to the best estimates we have, that was the best initiative. As I said, we are looking our position not for short term, but also the long term, what is the best for the company. Also, we have to say that the policy regarding iodine that was in place as we told before and what is going on in the market, it doesn't make decision for -- for people to make decision so rapidly even if you don't -- even if you go very aggressive. To close a company or to may -- or to pull [ph] people diminishing those volumes or what they respond in the market elasticity, those are factors to be seen, not in 3, 4 month but in the longer period. And we are continually doing that job and we can change our -- if we see the best policy toward pursuit of what we have said. And as you suggest, maybe sometime we can see that is the better alternative of what we have evaluated until today. And we will not -- we would change, we are always and will be looking forward to the best interest in the long run to have the best present value for the -- and economical for the company and care about also [indiscernible]. So just as your suggestion has been steady and we have decided, but it doesn't mean tomorrow we don't want to proceed [ph] way.

Ben Isaacson - Scotiabank Global Banking and Markets, Research Division

That's very helpful.

[ansana] 12/3/2014 10:33

And don't forget.... Chile's Michelle Bachelet sworn in again as president(AP) / 12 March 2014Bachelet's win followed a campaign of promises to finance education reform with higher corporate taxes, improve health care, change the dictatorship-era constitution to make Congress more representative and reduce the vast gap between rich and poor. Higher corporate taxes .. Ouch!

[che7win] 12/3/2014 10:28

Superg,
Good post, they're all hurting at this price, the latest indmin prices for iodine is $45-$50.

Sirocco and SQM recent figures published were for the whole year and an average price of $50kg. They are feeling the pain, hence throttling back on production as Sirrocco have also done.

They also say they haven't a clue what rivals will produce this year, I'd imagine we are the prime threat.
They used to say they were the lowest cost producer, now they say among the lowest as we are the lowest!

[superg1] 12/3/2014 10:16

If I was an SQM investor I'd be watching for that water 'law' with great interest, as I read somewhere that they would need $250m for seawater pipelines.

That will include a number of high power pumping stations.

One mining company quoted such pumping stations as costing one third of their overall power costs. That will be a big change compared to on site water via wells.

Algorta I believe could get to about 2,500mt with their current pipeline, which has a rate of 170 litres per second.

That fact draws a line in the sand for other mines, if the water rule comes in (150 litres per second).

So it seems the likes of Cosayach will be restricted to just over the 2000mt mark without a pipeline.

All the plans to expand were based on high prices.

What SQM sais doesn't make any sense.

Japan are in decline overall and that was shown in a post re data.

Cosayach were on 6000mt back in 2011 but now more like 2000mt, and restricted to that if the water rule appears.

Bullmine I have as 600-1000mt

Algorta are new and claim they will do 3000mt

SQM have just chopped off what looks like 3000mt.

2011 to now

Cos -4000, SQM -3000, Sirocco -600, Algorta + 3000 = -4,600

3% demand rise 2012, 2% 2013, 3% forecast 2014, that's plus 2,400.

So 2011 v the end of 2014 looks on the face of it to have a -7,200 figure supply v demand.

So in that case, Cosayach who we know little about, who just withdrew expansion plans, must be on 9,200m per year, which is complete tosh of course.

So for me, once again what SQM are saying is complete BS. Going back to the logic point of the broker question. The true answer is that based on the figures, it's looks like big stinking pile of BS re their comments. The answer they gave, as always, was as clear as mud.

Who is filling the monster gap in the figures.

[superg1] 12/3/2014 09:59

Info

Just another registered name, it gets a bit boring.

However


'There is no resolution on how SQM are going to play this, are they going to try to flush out the competition by lowering prices. This would help IOF long term , but in the short term more pain.'

As you rightly point out the lower prices help IOF long term. Sirocco's list opex report was $41 per kg.

Algorta was $35 plus exact figure unknown.

As one broker asked. If SQM are such a low cost producer why let the others on higher costs take their market share.

But the major point on pricing is that SQM go for long contract rates, as mentioned in their previous conference call.

But the main answer to the broker question is this.

SQM had plans to move mines, and that was going to be capex as forecast around 12/18 months back. The reason they wanted to move is that old mines were depleting and high cost. So the fact is they can't add and push off the others, they need those new mines, but for that they need the capex expenditure, which they have openly said they are pulling back on.

It's a fair and logical question posed. If SQM are having high cost mines take their business and they are low cost, then what SQM have said defeats common sense and logic. If my costs structure is far lower than my competitor, there is no way my competitor can push me aside, without incurring losses should I wish to go into battle.

Perhaps SQM are waiting to see if the 150 litre per second water law is passed. If it is, they will need to spend $250 mill on pipelines. A matter which they have neglected to mention. Then of course their opex will go up due to the extra power usage needed.

That rule may end up forcing some mines to limit production to use under 150 litres per second.

They did fear Cosayach, but Cosayach have that same problem, as they don't have a pipeline. I note in Nov 2013 they withdrew an application.

SQM looks to have dragged production back by 3000mt, when use went up 600mt and predicted 1000mt by the end of this year.

That's 4,600mt not covers this year. 600mt less by Sirocco but 1000mt in reality as they forecast 2000mt for this year.

So from 2013 levels to 2014 production levels with demand, there would appear to be a potential 5000mt loss, and I see no sign of Algorta or others covering that amount.

So logically the demand supply situation will tighten. Bullmine are said to have the highest opex of all, so they are probably loss making at the moment.

All Chile guys want higher prices, and they control the market.

[neddo] 12/3/2014 09:53

could info be nutter lucas?

[che7win] 12/3/2014 09:49

Price Briefing 27 February – 7 March Mar 07, 2014

... 2014". IM's iodine prices stand at $45-50/kg (iodine crystal, 99.5% min, drums) for both spot and contract orders. Lithium. ...

My target is 200p within 12 months, I don't care if you agree or disagree, I'm holding for the long term having bought more these past few months.

[ammons] 12/3/2014 09:43

I agree that a forward PE of 20 for this company based on unknown numbers for this year is not at all justified based upon the information we have so far. I have shares in the company myself and my profile was created here many years ago, 2004. I do like the company but there are too many unknowns at this stage to warrant a forward PE of 20 when the range of forecasts is so wide. The company isn't even providing quarterly production figures yet.

[freshvoice] 12/3/2014 09:33

Infoisrealnot

TROLL!
Registered end 2013
Only posts on IOFINA
Suddenly from knowing nowt now knows more than rest

EQUALS. FILTERED,

[bocker01] 12/3/2014 09:32

Info, I see you were created on New Year's Eve when most people had better things to do. In the intervening 10 weeks, you have made four posts, all on IOF. Do you post under other names here or elsewhere?

sorry 5 posts now

[infoisrealnot] 12/3/2014 09:29

An Iodine cartel ?

Look what happened when the Potash cartel was " Disrupted". No guarantee IOF would be bought out. After reading back over 1 and a half years posts it is clear that bulls on this thread were delusional in the share price predictions and financial modelling of this company.

Potash prices set to plunge after cartel breakup

Potash prices are poised to drop some 20 percent after the surprise breakup of the world's largest producer cartel sent buyers and sellers scrambling to establish new valuations, traders said.

[alphacharlie] 12/3/2014 09:29

Very strange. No Shonny predictions since Monday ??

[infoisrealnot] 12/3/2014 09:15

SQM at 15 - they do have a whole range of products, some of which sales are booming, those other products - not iodine - help to justify the high PE of 15.

[infoisrealnot] 12/3/2014 09:14

Have the operational/production costs been verified, that they make such a margin?

" still" - we are talking about this whole year - what if the price dropped to 30 dollars sale cost at the end of 2014? Not saying it will - It could go higher SQM prediction may very well be wrong.

All depends how SQM and other ( the cartel) play this out.

[che7win] 12/3/2014 09:11

Mas,
You keep asking the same questions, refer back to my last reply.

In addition to that reply, SQM, the market leader in the sector sits at a P/E of 15 with no growth expected over the next couple of years.

You need to remember the quiet closed shop that the iodine market leaders have been used to, dictating prices on their terms and what we are going to do to that market. We are a threat.
We have already taken 300MT out of demand, because we are producing that internally, next step is to take raw iodine into the market.

SQM would be very happy to pay a forward P/E of 20 for a company growing at 70% + a year. If we are allowed to grow independently, we will start destroying their business and they won't be able to do anything about it.

Thats why the company are taking a takeover approach very seriously and meeting regularly on that very topic. Every other US independent iodine company has been taken over at the production levels we are targeting, do you really think we will escape?

At this price, we are a bargain, because we have patented disruptive technology (yes, I have looked at the patents, I have checked out rival patents such as Drake, talked to the company and dismissed them as no threat, not even same area, I have looked at the Numis note and questioned why they missed the unique blowing method we use, different from all others). Shareholders will be taken out if we remain here, I would be quite happy for a takeover approach as it might waken some up.
If someone takes us over, they have 100 sites to roll out quickly and destroy the Chilean businesses.

I have heard from a couple of sources and through contact with the company a figure of 70 kg raw iodine predicted in 18 months or so. They believe the current prices are temporary.

Plug that into your calculations.

How on earth you think a P/E of 10 makes sense baffles me, incredible. You see no potential or growth in the business on that valuation, yet we are about to double our iodine production in the next month. We can keep growing as we are the lowest cost producer.

It's not just about raw iodine, Chemical division is going to have a cracking year, watch this space.

[1madmarky] 12/3/2014 09:07

Iodine price causing IOF pain.... Well yes but they are still selling the stuff at twice the price it costs to produce. Very few companies are in that situation. Roll on IO 4+5

[infoisrealnot] 12/3/2014 08:44

A PE of 20?

and yet a major competitor SQM predicts for our Iodine our key product:

"In early 2014, the company has already seen iodine prices decline, and management sees this continuing through the rest of the year."

There is no resolution on how SQM are going to play this, are they going to try to flush out the competition by lowering prices. This would help IOF long term , but in the short term more pain.

Masurenguy - I think you are correct in challenging the PE 20 assumption.

[masurenguy] 12/3/2014 08:31

On what basis do you think that IOF warrants a PER of 20? I think that a PER of 10 - 12 is a much more realistic ratio. If you apply an average of the three ratings that you have quoted above - 10.7p - then the target share price for next year would be in the range of 107p - 128p.

[che7win] 12/3/2014 08:25

O/t,
Poundland listed, another 15% rise within minutes, this market is hot.

IOF at the end of the triangle, squeezed into a corner,wonder which way it pops out?

It looks like it's bottomed but I think we need some news.

11p EPS for next year according to GMP note, Numis lower at 7.1p, Allenby higher at 13.9p.

P/E 20 on next years earnings gives a share target range of 142p to 278p.

[engelo] 11/3/2014 23:47

Know that some like to keep track of the jobs market: here's one for a ND water depot operator.

[superg1] 11/3/2014 19:41

Bobby

A bird in hand situation.

As mentioned recently Hal wanted 50% ownership of Atlantis, for a 0.6 cents pb based on 10% recovery ability.

If ND water rights are fully appropriated and demand is not fully met then it could be a very valuable asset. Perhaps a long term view that the money offered for 50% was a bit of a steal. Since that rejection, hot water for fracking is in play, in some areas at $6 pb.

$6 per barrel is 1000 times the revenue of that 0.6 cents. About $2.50 of that would be opex though. Cold water at 60 cents still has it at 100 times cheaper than a $10 mill offer.

So a gamble on the long term future.

Bob Shaver the water nut of North Dakota estimated last year 3 billion gallons would be needed. Reports suggest 5.5 billion gallons were used. That's only the recorded usage not all the illegal extraction etc.

Obviously demand is good as some depots went over their allowance and got fines of $600k and $800k. Some depots use up their allowance for the year, and have to close until the next year starts.

As for chatting about it, why not?. Other shares have products or ideas in their pipeline 5, 10 years away or even longer and they may never appear.

40 odd days of the 60 have passed re the IOF response. So it's very relevant. The water permit situation should be concluded one way or the other near term.

I'll be interested to see of they are allowed to transport any into ND.