Iofina Share Discussion Threads

[superg1] 03/4/2014 07:26

Writz

Exactly my point re the AIM.

Company X that all hype about may be so high risk that one wouldn't want to take more than a punt on it, thus when some claim a ten bagger it could be just a few thousand made or less etc, and often is.

You can see that by the size of trades and posts on some of those .4p shares etc. An obsession with number of shares owned rather than percentage gains, that's not guessing a friend or two say to me all the time, 'but look how many shares I can get on that one for my money'

It's so easy to see why those of significant means much prefer 5% gains in a big company, which in terms of the returns, due to the amount they are prepared to risk, is far greater than a 50% gain on a punt on a high risk AIM.

Then with lack of liquidity the MM's seem to play a canny game on some of those, tighten up the spread as you buy, then any sign of selling the spread jumps significantly.

So it's that old risk reward ratio.

[naphar] 03/4/2014 06:37

Jeez, you've got to feel for them. Not nice

[noli] 03/4/2014 06:28

Chile has had another quake a couple of hours ago, 7.6, lets hope none got hurt in the second quake.

[napoleon 14th] 03/4/2014 01:14

Well, I just increased my position in IOF by +66% this a.m. @ 54p.
Say no more (tho' I ain't Mr Big by any means!)

[gadolinium] 02/4/2014 23:02

SQM production facilities appear unaffected by the recent earthquake.
------------------------------------------------

SANTIAGO, Chile, April 2, 2014 /PRNewswire/ -- Sociedad Quimica y Minera de Chile S.A. (SQM) (NYSE: SQM; Santiago Stock Exchange: SQM-A, SQM-B) announced today its preliminary evaluation of the effects on the Company's productive facilities of the earthquake that occurred last night in Northern Chile.
•There were no accidents or injuries involving personnel at SQM's productive facilities.
•The earthquake was approximately 200 kilometers from our operations in Nueva Victoria, 300 kilometers from our operations in Maria Elena, 500 kilometers from our operations in the Salar de Atacama, 430 kilometers from our operations in the Salar del Carmen, and 260 kilometers from our operations in the port of Tocopilla.
•Upon preliminary inspection, no structural damage was detected at our production facilities. ◦Nueva Victoria: Operations were suspended last night resulting from a loss of electricity. It was reestablished this morning, and we expect operations to resume later today after an operational check is completed on our main equipment.
◦Tocopilla: Operations were suspended last night resulting from a loss of electricity, and following a tsunami alert issued by the Chilean authorities. We expect that electricity will be reestablished today, and we expect to resume normal operations tomorrow.
◦Maria Elena, Salar del Carmen, and Salar de Atacama: Production was not suspended, and we are operating normally.

•There was no visible damage to the town of Maria Elena, the city of Tocopilla and various towns located near our operations in the Salar de Atacama.
•We will continue to assess if there was any damage to our production facilities.

[writz] 02/4/2014 22:29

I agree - and it's the fun thing about AIM that when fundamentals line up, and sometimes even when they don't, the ride can speed up pretty fast.

[writz] 02/4/2014 22:27

che7, you can share my needle.

[che7win] 02/4/2014 22:25

Writz,
Lol, think you have a good point there.

Maybe I need another ipo flip instead.

[writz] 02/4/2014 22:20

SG, che7 - sometimes I think trading on AIM turns us into junkies. Rates of return that look outlandishly lucky to ordinary folks can leave us feeling, well, slightly disappointed. "Wot, only a three-bagger? Five years? I gotta find me another dealer!"

[che7win] 02/4/2014 22:13

One other thing,
When I talked to the company, they mentioned a lot of interest in the water, if we get it I expect it to be VERY lucrative, as much if not more than the iodine business over the next year.

[superg1] 02/4/2014 22:07

MB

How can it easily go the other way when Chile control the market and have opex very tight on margins.

Yes it could but they screw themselves over and lose cash.

Algorta looked like $35kg plus re opex, Sirocco last actual was $41, I see they hope for $29 now.

Easy to just think that way but the logic supports this is the bottom or very very near to it.

SQM dropped 3000mt it seems they clearly don't want lower prices.

Chile peso will play a part too

[freshvoice] 02/4/2014 21:52

If the price goes to $70 kg then we will get our dividends in ¥ not $.

[che7win] 02/4/2014 21:36

Mb,
I'm not factoring in anything, a lot can happen in 3 years, the last 6 months proves that.

You will know that a $40kg to $50kg increase alone is an 8kg difference which is a 40% increase to gross margins and a higher (geared) increase to the bottom line.

[mister big] 02/4/2014 21:25

hi che7win,

you look like a glass half full kind of guy - you can't factor in a rise to $70 buck a kg because it could easily go the other way . so, it will take time!

[superg1] 02/4/2014 21:21

A recent report.




Not forgetting the USGS team thought just 12 months the 3 forks was full of water, they ended up recording it as doubling Bakken reserves.

Now some are hunt in the Nisku which runs all the way from Roosevelt to Toole county 100's of miles just south of the Canadian border and all the way under iof.

Montana Exploration a small oily already says they have encountered live oil in a 5 foot vertical test in what they call the shaunavon, it looks to be about 20 miles from iof land.

Go West into Toole county and one from is targeting the Nisku in the Kevin Dome, and uplift that looks very much the same as the uplift under IOF


From an Abexco presentation Sept 2013

East Kevin Field - Nisku Oil Development Play
•
Low risk offset drilling in a well-diversified light oil portfolio situated in northern
Montana ~16 miles from the Canada-US border

•
Primary objective to target the conventional Nisku carbonate play

•
East Kevin Field is located in the best Nisku porosity area discovered on the dome

•
Large coverage of high quality 3D seismic – 39 square miles (24,960 acres)

•
Multi-zone potential, seven shallower formations with proven reservoir potential
(and the Bakken currently being evaluated) will be seen and evaluated by every
Nisku well drilled.

•
Shallow wells, under 3,200 feet.

•
38 degree gravity oil

•
Vertical wells in East Kevin Field average over 50,000 BO each and produce no
water

[che7win] 02/4/2014 21:06

Mb,
We are looking at 5p EPS as achievable this year; even with static plants and a couple of mobiles next year, we should move from 700MT to 1200MT next year (6 full plants and 2 mobiles over next year and whatever else they roll out next year).

The share price is partly reflecting the lower iodine prices, that accounts for some of the fall.

If our opex is $21 per kg and our selling price around $42 then our mark up is 100% this year gross profit.
If as some experts have predicted the iodine price is $70 in 18 months time, that mark up moves to $50 margin, maybe more with lowering opex. That is a 250% margin... Just a possible scenario but as iodine is likely to rise from here it makes IOF a geared play with more or less fixed central admin costs and plant opex costs.
5p EPS would be closer to 12p EPS this year on those figures and cash flow transformed.

Add in a growth factor to the price and my view is we would be above 200p a lot faster than you suggest.

We are a lot more valuable to the Chileans or Japanese who could throw money at growing production out to some of the 100 sites available.

Water venture on top, plenty of hidden value here.

[superg1] 02/4/2014 21:03

A sensible guide under the circs. If helium ever featured just farm in out. It all depends how much the Sweet grass arch lower levels contain.

Helium which has been absent in the markets (US monopoly on cheap gov supply) should start to feature in about 3 years.

I believe Linde or the like did an MOU with Gazprom for something like 2018 but saturations are low and that is the key for Helium production which can be expensive. That's another rare resource in commercial terms. But overall probably pocket money for IOF if it ever came about.

3 forks and Nisku are featuring heavily but that interest in the area has only gained traction in the last 10 months with the Nisku just a few months ago and near IOF. That's handy as others can spend money and if they hit decent oil, the landmen will descend on the hunt for leases.

If you are unaware, Weil resources while hunting for and finding Helium, also found interesting oil prospects in the Nisku. So interesting they decided to wildcat way east in the same level with a comment that the entire geographical area could open up. They have never drilled for oil in Montana before and chose the Nisku level where the 3 forks is already proven (Roosevelt county.

So more than a passing interest in that, it's just a hell of a bonus if they get lucky, but certainly not worth doing a Gordon brown gold dump re that. Keep it, and let the oil find them, not them find the oil. Farm out or just wait in others, if they hit, the value of the acreage should start to climb.

They let the triton acreage go way back as surplus to requirements, the oil found the acreage and it was sold for $15 mill by the new lease holder (30k acres)

[mister big] 02/4/2014 20:38

I think a valuation of £300m in three years is possible, given the disruptive nature of the business and its radically lower cost base. I believe they have issues with the technology and that CF pushed the company to expand beyond the managements competence to control the business. Therefore, I would expect to see them concentrate on the engineering, cash flow conservation and then move forward from a solid base. using the george bush quote - of chewing gum and walking at the same time, small companies often have difficulty in fast growth phase. I expect iofina to overcome this in due course and post good revenue numbers.

The acreage and potential gas / water value is an added bonus and should not be counted. I expect the water licence to be granted but the next debate will be how to fund it and I would expect a JV of some type that de-risks the proposition.

I believe the iodine price probably has bottomed around $40 a kg, and expect this to rise up to $50 , although the chilean earthquake seems to have occurred in iodine producing country where there will be infrastructure issues , either small or large.

I think the cost base in chile means its hard to compete with iodine being produced at $15, if one imagines iofina taking a market share of 15% over 3 years, when expansion returns after consolidation ( those who say its ex growth are clearly short sighted, the model is taking a pause to fix the issues of growing too fast, nothing stops the resumption in due course).

They seem to be looking at over 1,000 MT when io1 through to ion, are pumping but i am sure it will happen slower than the company expects!

1000 MT @$45 = $45m dollar revenue, profit $15 - 20M / PE 13 ( but could move higher when growth starts again) - $227 ( mid point) / 1.67 = £136m
say £1.10 ish

however, when cash flowing and everything settled start to add io7,and move revenue.
add back something for deviatives business which i'm less keen on, focus on real speciality chemcials added value.

So I see the following;

1000 MT - 2014 ( run rate)
1750 MT - 2015
2500 MT - 2016

and then you are back to the magic and ridiculous £2.50 it was selling for last summer , three years to get 2.50 , shares purchased at 54p average, and probably on this board there will be a vicious argument over the dividend policy and whether the company should be in helium market or over the new wiz use for iofina. I suggested the company should fund a university chair to find new user for iodine!!!

[engelo] 02/4/2014 19:39

MB serious question if I may. I'll assume that you researched the core iodine business and the trading positions on the market in some depth to support your well timed buy.

However did you assign any value to IOF's water and oil/gas assets and potential, or did you see them as incidental factors?

[cyberbub] 02/4/2014 19:36

Mister big, with respect I think your 5 year timeline to reach £500M market cap could be conservative. At a p/e of 20 (easily achievable for a growth company, especially if we get a Nasdaq listing in due course), we would only need to clear £25M p.a. I know £25M may seem a long way off today, but if the company really has (finally!) started to reach the revenue and profit inflection points, and perhaps with a bit of luck if the Iodine price starts heading north too, I see no reason why we couldn't be making that sort of money within 2 years?Just my view anyway.NAI

[mister penis] 02/4/2014 19:31

I too am a multi millionaire who has never used ADVFN before. I don't even know what a computer is (or electricity). I have been reading this thread with interest and can see that there is some great research here and some interesting ideas.

It is clear to me that the investment opportunity is still not quite hitting true with all posters, quite a lot of positive mirrored by a constant flow of negatives.

In my opinion what is being discussed here is a great business model (if a little disruptive) and it will take a strong management team to pull it off.

So I say, go for it Monkey Magic, a thumb based stick on accessory start up is a sure fire winner (in the long term).

ATB.

[noli] 02/4/2014 19:19

It's funny i see all the posts today, where are the usual bb derampers. Where have they all gone too.

Not one post from them, it looks like H was right and the fight back begins, hats off to Mister Big, he has given them a clip around the ear and sent them packing with no pocket money.

Nice one MB.

[engelo] 02/4/2014 19:09

Prepare for a shock: MB is not perfect ;-)

However his Shakespeare quote was very apt and if extended covers both the bull and bear views when the share price was 50p all those hours ago:

"There is a tide in the affairs of men, which, taken at the flood, leads on to fortune;

Omitted, all the voyage of their life is bound in shallows and in miseries."

MB only joking, but you'll have to forgo the fame and be content with the fortune :-)