Iofina Share Discussion Threads

[writz] 11/6/2013 10:10

SG, maca's calculated cost per kilo for SQM looks low to me. Is that in line with your view?

[superg1] 11/6/2013 10:01

Maca

It's great to have someone that digs so deeply. I waffle on simply because I'm stuffed full of information.

I won't do a full reply here, can point to links but will keep it short.

Groundwater is in short supply, if you check deeply into SQM you will find the mention of a pacific pipeline and EIA assessments ongoing. They need seawater for the future.

Sirocco mention it too in their reports for the future.

Toyota themselves funded the seawater pipeline, in the tie up with Algorta (25.5% interest).
It was not such a 'wise' move by Toyota, and they have got nowhere near their anticipated production, they obviously did their DD at a time when water wasn't an issue, but it is big time now, with no short or medium term answer.

Toyota had interest in OK but moved to Chile as in their 'wise' eye's it was the only place left in the world where commercial iodine existed.

On figures

You have doe he work, but need to consider some bits IOF have said. Don't forget in 2011 the spot price hit $100kg and last year most of IOF's iodine was also bought on the market for the chem div.

Then in one year end rns, they mentioned keeping customer prices down to honour a contract. That probably meant they were paying more for the the product, than what they sold it for.

On royalty rates

They will differ, but for io2 I believe they are low, and include royalty costs, each deal will differ. IOF have quoted $10 to $15 per kg.

re this part

This royalty question (oklahoma mineral rights apparently ascribe a mininmum of 12.5% of the extracted mineral value 'cost free' to the mineral rights owner), and the apparently low sales value per kilo are of significant concern to me in terms of investment evaluation.


I'm not sure where you got that form as iochem and co are the only real historic cases



You can see it seems the locals feel like they have been ripped off on flat fee's, where id you find the 12.5%. I have seen half that.


On iodine sales they won't be anywhere near the prices you quote. As said they honoured existing contracts

'Iofina made a strategic decision to honour our quoted prices to these new markets while iodine prices were changing rapidly'

The easy answer is attend the AGM on the 19th and hear it for yourself, you will be blown away by the potential.

[maca1212] 11/6/2013 09:32

Superg,

In post 1477 you referenced an article which referenced huge increases in desalination demand amongst chilean miners, however are you sure that is pertinent to iodine extraction?

This from toyota tsusho's 2012 "wisebook"

"The usual practice in Chilean iodine development is to use groundwater to soak the ore. In the new large-scale development project, the amount of groundwater taken is restricted, so as to preserve groundwater supplies. To achieve this, a pipeline has been laid from the seashore to the inland desert where the iodine ore is found, so seawater can be used instead of groundwater."

Given that US extraction is from brine there is I presume little difference in the downstream chemistry.

I have seen production costs for iof referenced at circa $10-15 per kilo, is it known whether this cost includes the mineral rights royalty cost?

By comparison I calcuate SQM cost per kilo (from their 2012 report) at circa $19.82 over 11,000 Mt with an average sales value of $52.55.

In their 2012 report period IOF shipped 522,840 Kg of product with an imputed cost per kilo of $24.77 but achieved a sales value per kilo of only $31.35.

While I understand that the cost input side of the equation is materially affected by the upramp in the WET and IOsorb production is there any explanation that I have missed in the retative underperfornance in IOF's achieved sales per kilo (which although lower was significantly higher (65%) than in 2011.

This royalty question (oklahoman mineral rights apparently ascribe a mininmum of 12.5% of the extracted mineral value 'cost free' to the mineral rights owner), and the apparently low sales value per kilo are of significant concern to me in terms of investment evaluation.

I am sure that I am behind the curve, and sorry to be a pest but I do like to do my homework.

Thanks

M

[bobsworth] 11/6/2013 09:23

Yes AGM is just one week tomorrow and hope to be there.

[diggulden] 11/6/2013 09:19

It disappeared yesterday I think Chumbo.

[chumbo] 11/6/2013 09:16

I notice the usual sell of 2,000 @ 300p is absent today

[superg1] 11/6/2013 09:16

I forget the crazy names I was called for suggesting this share would pass the share price of some shares that the market, tip sheets and analysts ramped to death.

It's not far off now.

I would rather break 250 on a solid update, it's not that I don't think that is coming and the 19th gets ever closer.

I hear insti's are moving out of metals and other common traded resource stocks, to more niche solid sectors in resources. Perhaps that is helping, some digging may prove that up, I'll have a look.

[diggulden] 11/6/2013 09:07

Will today be the day we attack 250?

[superg1] 11/6/2013 08:56

Urban

We did suggest here long back that Some interested in shorts should look at SQM for the turn, By concentrating on IOF, lateral investigation showed that was coming.

That was against the flow of a number of highly rated firms saying buy.

Those analysts on SQM had iodine as the rock of the business as on risk analysis they couldn't see anyone affecting SQM on that front. I've viewed all the notes.

They didn't expect SQM to have to go defensive on iodine, as SQM have never had to do that before. If you look at the last 2 years reports they talked of ramping up production.

We said they can't, as doing so would be counter-productive via potential price drops, wiping out increased production gains, and to the negative side.

A $5 per kg price drop would mean a $60m reduction in iodine revenue.

To gain that revenue they would need to add 1000mt, but with Sirocco, Algorta, Cosayach, Iofina and Scm potentially adding to a yearly demand increase of 1000-1500mt, it would be counter productive for all.

In fact all the Chile players are now in that boat, it's a game of chess trying to balance who is doing what to make sure the price holds.

The rumour was just weeks back that they need/desire higher prices this year.

As we have said for a long time, most will need seawater pipelines. Sirocco have it in their long term plans, and it's all mentioned in SQM reports, if you look deep enough. When they move to seawater opex will go up again.

The above is why IOF have gone for the bond, (loan takes too long), to react while the Chile guys are on their backsides unable to react aggressively to any new entrant.

IOF rolling out up to IO6 in H2 will be soul destroying news for some Chile miners. The one's currently using seawater have the highest opex, which I believe are Algorta and SCM bullmine. SCM I hear have daft opex, so would probably disappear on any price drop.

IOF can march on, as they have such low capex and opex. I'm sure in time, the US end users will move to IOF supplies, and that alone will finish some smaller Chile mines.

Price drops would have the same result.

After the recent mention of Iochem in OK and how are they doing. Well the digging by another shows they are spending cash to just to stand still on a declining resource, they can't move due to legislation banning new sites for them.

It can't be long before those SQM analysts, who have iodine as the cornerstone, spot IOF.

[field3] 11/6/2013 08:52

Hi Superg,
Could you send me a message as well please

cheers

[bobsworth] 11/6/2013 08:50

Superg1
Please could I receive a message about the new bb. TIA

[chrislake] 11/6/2013 08:47

Hi SuperG

I watch with interest and this moderated BB is better than the last which became a mess. Can you add me to the new BB list too please?

Thanks

[smilingmickey] 11/6/2013 08:44

Hi Superg,

Would welcome a message re new BB.

SM

[nearlyman] 11/6/2013 08:43

Re Warmsun's post 1483. As I have no posts in my messagebox I would truly like to be included in any new message board. Thanks.

[mr paul b] 11/6/2013 08:40

Hi super , can I have the info sent to my pm box too , you have sent messages to me in the past , thanks .

[superg1] 11/6/2013 08:34

Posts noted.

I see the market didn't really seem to pick up on the Dialight rns too well first thing. Not one I follow, but I've just taken to reading rns's again (outside of the CR Top trader thread type).

They got ITM wrong imo yesterday, and Dialight today. Dialight was a short though, so I resisted temptation, it would have paid well.

[urbanyeti] 11/6/2013 08:29

SQM are hitting new lows nearly every day. They have lost a third of their share price since September & not looking like levelling off yet. IOF has quadrupled in the same time :)

[escapetohome] 11/6/2013 08:16

Just bought 4,000 shares but was offered 45,000, so a little supply around.

[skasher094] 11/6/2013 08:05

This is such a perverse share
When it opens down it seems to
Signal it will be up at end of day!

[peterz] 11/6/2013 08:03

Me too SG. I have had a couple of messages in the past so the PM box does work. Thanks in advance.

[joeblogg2] 11/6/2013 07:56

superg. I have checked mine and nothing there. Hopefully I will be included in any set up. All being well will be at the AGM.

[battery] 11/6/2013 07:52

interesting idea skasher....

[skasher094] 11/6/2013 07:52

If one has been set up can I have info sent to my inbox
Superg has my email from previous message sent many
Moons ago

[malachey] 11/6/2013 07:36

re: warmsun's post.

I was wondering about that too. Having said that I'm perfectly happy with this set-up now that moderation is possible.