Iofina Share Discussion Threads

[superg1] 19/4/2014 09:35

If you look deeply enough into one of SQMs 312 page 2012 report then you will find this.

In September 2010, the National Environmental Commission of Chile (Comisión Nacional del Medioambiente or "CONAMA") approved the environmental study of our Pampa Hermosa project in the Region of Tarapacá in Chile. This approval allowed us to increase the production capacity of our Nueva Victoria operations from 4,500 to 11,000 metric tons of iodine per year and to produce up to 1.2
million metric tons of nitrates, mine up to 33 million metric tons of caliche per year and use new water rights of up to 570.8 liters per second. During 2012, we made investments in order to increase the water capacity in the Nueva Victoria operations from two water sources approved by the environmental study
of Pampa Hermosa, expand the capacity of solar evaporation ponds and to implement new areas of mining and collection of solutions. Additional expansions may be done from time to time in the future, depending on market conditions.

Note the depending on market conditions. In other words the opex of high costs mines floored them and they closed them.

During 2012, we submitted a request to the CONAMA requesting approval to expand our caliche ore extraction in the region of Antofagasta, which, if approved, is expected to increase production capacity by 10,000 tons of iodine and 1.3 million tons of nitrates per year. The project also requested permission
to build a pipeline from the Pacific Ocean to the mining site. Currently, the request is being evaluated by the commission and other governmental agencies.

SQM not long back planned $400m to $600m for expansion plans but have pared that back to $150m I believe.

Seawater pipelines I understand would cost them $250 mill, so you can see that wouldn't be welcome where fresh water is available.

The Nueva Victoria area expansion has water rights for 570 litres per second.

The 150 litre per second rule, which looks set to appear would scupper those fresh water rights, so they would need seawater for that region too.

So while the 150 litre rule sits there with little meaning to the masses, I and those here know what it means to SQM, Cosayach and others.

Analysts sit asking daft questions in those conference calls to SQM with SQM bosses dithering on answers. SQM know what is coming and they know the costs involved, the analysts don't, so they make judgements on limited knowledge, and had clients buying SQM on the highs.

[uppompeii] 19/4/2014 09:25

Hmm, maybe forget about IOF then and just buy Iodine futures...

[superg1] 19/4/2014 09:10

View not changed for me.

The law and rules suggest it will awarded at the hearing, maybe in part if the nimbys don't like the size of the permit.

The reference to civil servants is apt, as I liken it to the planning debates that often go on along with appeals. The nimbys set their army against an idea and get the votes, but the law wins through in the end.

For iodine then yes IOF are on a growth curve going from nothing around 18 months back to 5 running and number 6 to come.

A big factor there is the relative chaos is Chile compared to 3 years ago. Don't forget they were knocking it out there for $25 per kg back then and iodine wasn't a big part of the SQM revenue. It quickly became a cornerstone, and when it hit $45-$50 it forced them to close mines.

Look forward 3 years and try to imagine where Chile will be.

Higher taxes for miners, tax freebies removed, 150 per litre second rule will push at opex and cost SQM $250 mill on capex. Energy prices have been rising at 11% per year for over a decade and now they talk of a carbon. The iodine price has been squeezed by a few chasing the higher prices to a level where margins will crush them.

In that recent article it didn't look too pretty with the way they treat their staff and Chile is renowned for it's miner strikes and protests. The SQM bosses face all those fraud charges as do other people in the finance sector.

This is seems inevitable that over the next year or two iodine prices will rise strongly compared to now.

Higher tax, carbon tax, and higher opex due to power use for seawater. Some like Cosayach will have the choice of reducing production or forking out for seawater with higher opex.

The Chileans simply can't cope with this price going forward, and a new Government is not providing the freebies and suspect deals that were going on before.

A rise to $60 per kg over 3 years seems a bit low, as I expect that by next year, some think higher ($70), but v current prices for each 1000mt that's $15 mill of profit v forecast recent opex. But then on that front as it seems IOF have higher PPM sites to target, then IOF costs will come down while Chile opex goes up.

Japan is in production decline but they have a growing list of sizeable companies that have iodine as an end use (within their portfolio of numerous sectors). Their production has been tied up in a tight circle of end users for years. So with iodine use continuing to grow they have to look elsewhere to meet the demand.

No Mr B won't be hoovering them up, there is a long queue.

[nellyb] 19/4/2014 07:25

shoddy, you just keep that bobble-hat handy.

[mister big] 19/4/2014 04:00

The only thing I will be hovering up in Tuesday is daiquiris at the breakers hotel , palm beach .
Curiously , I've seen this before all bad news shares marked down, all good news discounted . Mister market cheered the shares up and cheers the fall.
However, the business is reaching a turning point where it produces iodine in commercial quantities . Things change when that happens particularly when input cost is below the competition - Users might want a strategic alliance to secure supplies and look to fund that . This happens in most industries . Iodine is particularly small industry and I would expect to see that happen.
The water rights will probably get granted at the hearing .
I think update will focus on the run rate and future prospects and shares will do the same.
Markets in small caps are often manipulated and a further shake out is very possible ! ( who cares if you don't want to sell )

Ps shonny - who knows the price at the end of June , but anything could move it - oil found in Atlantis , takeover, etc etc - 1p a day or all in one go !

[engelo] 19/4/2014 01:16

Hew/Cyber agree, political decision.

CYber: there are no religion based holidays in the US.

In UK there's no RNS service on Bank HOlidays so we'll have to wait til Tuesday.

[shonny] 19/4/2014 00:55

That's very benevolent of you Mr big. There are thirty five trading days until the 10th of June. Given that the share price is almost certain to fall further on Tuesday and again on results day it would need to rise 66% from 60p to achieve your target of £1 by 10th June. You must admit that's highly unlikely.

[festario] 19/4/2014 00:40

Mr Big,
I have looked underneath the cushions on the sofa, and I have raided the ceramic chicken money-box in the kitchen cupboard, but I have not found enough to mount a meaningful raid on these shares on Tuesday.
I cannot sell GVC (for dividend income reasons), nor QFI, so I will leave it up to you to hoover up all the loose shares which will be floating around when the market re-opens.
You own about 4% of IOF, and I own about 0.1% of it, that ratio will have to remain unchanged for the foreseeable!

[mister big] 19/4/2014 00:19

Isn't bank holiday in England !
I've got an excuse being on a cruise ship - the iofina is always busy .
I agree with the comment about civil servants always looking to defer decisions and not surprised a hearing beckons! This has been discussed for 18 months and these things take time - must of the hearings result in successful application . However , I value iofina £1.25 without water or in fact oil possibilities .
The company is producing iodine from 5 plants and iof 6 scheduled to go online before end of 2nd quarter.
The need for info is understandable but good investing requires patience -

Ps shonny bet still stands and I'm surprised you don't want to take it .
I'm informed chatting to internet trolls only encourages them - lol , keep going I enjoy your comments :) ....

[cyberbub] 18/4/2014 23:27

Plus Labor Day and MLK Day as I recall.To be fair the UK only gets 8 public holidays a year, far less than most of the rest of Europe.

[sandbag] 18/4/2014 22:28

cyberbub,

Yes,

They have Thanksgiving and Independence Days. Unless it has changed in recent years a new starter is not entitled to any holidays other than public holidays in their first year of employment. Unlike us and moreso Europe (who don't even like working weekends) the USA has a strong work ethic

[cyberbub] 18/4/2014 21:28

No doubt there will be an 0700 RNS about water on Tuesday (or maybe even Monday?) - let's see what the management's take on it is...

GLA

PS I must say I didn't realise that Good Friday was a working day in the US... do they not get any holidays over there??

[cyberbub] 18/4/2014 21:26

Agreed bobby... it's no coincidence IMO

[bobbyshilling] 18/4/2014 21:11

cyberbub, rns of 3 Feb told us that the DRNC have said the amount of water applied for is both physically and legally available. No, it is something else that is stopping us. Let us hope Mr. Bellamy can sort it for IOF; that must be one of the reasons why he has been brought on board?

[cyberbub] 18/4/2014 21:04

Hew your post 19239 is spot on IMO. Water resources are undoubtedly stressed in the area, so it has become a political rather than an administrative issue, and I think the water board wants a court make a final decision so they don't get the blame. Even if we eventually get a smaller allocation than applied for, that would still be good.Meanwhile I agree that the main iodine business is growing healthily.Let next week be a 'kitchen sink' week and then build from there. GLA NAI

[bobbyshilling] 18/4/2014 20:47

The water business is only non-core by name. It would have been (and hopefully still might be) a big, big earner. The talk of 99% certainty for the permit a few months ago has not been accurate to date. Another disappointment, so let us hope that the iodine production figures can be met by year end.

I hope that the appointment of Mr. Bellamy may prove to be the ace up the sleeve for water. The bottom line profits for this company will be a lot less without us being able to sell water, non-core or not.

[sandbag] 18/4/2014 17:16

"Having somebody on board with the necessary experience and expertise ought to mean that a positive outcome will result at some point in the future. "

My exact thoughts too Cordone......at some point in the future. Meanwhile let's concentrate on the core business.

[hew] 18/4/2014 17:13

In my view there is a great advantage in the procedure being followed right through to a Hearing. An advantage for the civil servants of the Water Department that is - in avoiding personal responsibility for a decision! Not a nice thing to have on your shoulders in those circles. Suppose something goes awry in a year or two? A career blighted - the pension at risk. An Enquiry even!

Ever since the December refusal, a Hearing has been as good as nailed on, imo. Have the lawyers argue it out and if the case is valid it will be granted - that is the safe way for the Dept.

From some posters here I understand the Dept. has already accepted that IOF's case is valid in all technical and water availability respects and that IOF have a list of potential users. So now 70/30 likely to be granted in my book. I'm relaxed either way - it is the iodine that matters for me.

[cordone] 18/4/2014 17:05

I'm sure that the recruitment of Dr Bellamy was with the possibility of the water permit being denied. Having somebody on board with the necessary experience and expertise ought to mean that a positive outcome will result at some point in the future. As has been stated by various posters today, an early drop on Tuesday morning may present another opportunity to add to existing holdings at a giveaway price. I'll be ready.

[jointer13] 18/4/2014 16:33

what I cant believe is that some people think that the water is priced into the share price
the iodine isn't priced in.!!!! yet.
5 plants purring away producing good quantities of high quality iodine. at the cheapest costs on earth.
soon to be 6. and we will be rolling out more in due course.
what a brilliant situation to be in.
(Japanese and Chileans must be envious)
yes the water is disappointing not getting it at this moment in time, but its still on the agenda. (I for one believe we will get it)

IODINE IS THE CORE BUSINESS.

[festario] 18/4/2014 16:24

Psycho, and all... the urgent need for water is irrelevant.We have been supposedly on a fast track to this lucrative venture for over a year, so forget it as the powers that be do not want Iofina to have it.Now, we will get hammered yet again because of it because negative rns's always hit us hard. But, I am putting my tin hat on and waiting for the recovery.As someone said yesterday, I am jealous of those buying in at these levels.I am up to my gonads in IOF shares, but cannot sacrifice any GVC or QFI to take advantage of this price.

[phsycho] 18/4/2014 15:22

not sure how relevant this is.. but it does highlight that water resources are "stressed" and action / support is required.

[monty panesar] 18/4/2014 14:56

Boogle,

From what I have understood is that production costs had gone up to the $21 per kg level but with tweaking will come down to around the $15 level.Don't forget the chemicals division will make around $8 profit per kg on over 300mt this year as well.

Monty

[phoenixs] 18/4/2014 13:52

Bogg1e, I tend to think that your estimate of $28 cost is much to high. The ppm figure given by Numis was very much on the low side(120 approx). I think that they will do more lie 150ppm which will reduce costs substantially. I would not be surprised if that with the five plants running, they will be near enough on target to achieve 700mt per annum and that once IO6 is only line next month that figure will be exceeded.