Iofina Share Discussion Threads

[engelo] 12/6/2014 17:05

superg: The AGM (which I couldn't get to) was made real to me by the brilliant investigative reporting that came out of it*. A real turning point imo, and my glass is 3/4 full right now :-)

*Thanks (a bit late) to all who contributed :-))

[engelo] 12/6/2014 16:59

phoenixs: very true. Joe's speaking from an unusual perspective, though: he's in the black :-)

[superg1] 12/6/2014 15:54

I get various comes from all directions, the glass is definitely half full off this BB with anticipation of good stuff to come. Compare that to agm day, when those not present assumed glass half empty.

[phoenixs] 12/6/2014 15:28

joe, very sanguine and I think that most of us have seen enough over the past few months to take nothing for granted. However, there is no harm in looking forward a few months or many months because surely that is the basis on which to invest

[joestalin] 12/6/2014 14:58

Yes SG, - the industry generally tends to take the most pessimistic view if it does not know. PI's tend to take the most optimistic view if they do not know.

What I am saying is that, although I buy the story in the long term, (at the risk of being thrown out of ADVFN) I would advise against ordering the Ferrari just yet.

[rhwillcol] 12/6/2014 14:45

Nice AT buys coming in ....

[superg1] 12/6/2014 13:32

Joe

Re indmin

I find the major sectors/analysts and everyone else tends to be months behind what diligent PIs can dig out on various shares. But the market will react to what analysts and others says.

EG the Roskill report on the world iodine market was put out showing all the expansion pending by the Chile folk, right at the time they were cancelling EIA applications, reducing production, and closing mines.

Someone actually spoke to the author of that, and it was a 'hey ho' we only put one out every 3 three years and they admitted it was out of date the moment it was released.

Laura of Indmin talks to some in the industry. At the AGM IOF said they just sold some for $42 per kg, so that immediately scuppers what they have said.

No doubt times have been tough but Lance said, SCM Bullmine have stopped as their costs are $47 per kg, I believe those guys were trucking in sea water. SQM stopped the El toco mine and the iris plan. Both have previously been offline when the iodine price was under $50. As soon as it approached the price they closed them. He said those areas were on around $52 kg costs.

As we know from the one media release by Algorta they looked to be on around $38 per kg costs. It was said they have pulled back too.

The pull backs combined are far greater in metric tonnage than the over-supply , at some point the pendulum is going to swing the other way at this rate.

He described Cosayach

Basically they work on ignoring laws to get the cheapest production rate. As we know recently, theft of water. They fire there entire workforce every 9 months in a cycle apparently, that is to avoid pension rights and other matters.

The recent over-supply was them, by criminal means upping their production etc etc, which has just been dealt with at the Supreme court.

Once the balance returns I expect prices over $50 per kg. It would seem a supply shortage will appear over the next 12 months.

Some could say 'SQM could fill the gap' but as shown their extra capacity looks to have opex of over $50, they need to move to pampa blanca in that $665 mill capex plan (on hold) to have decent opex.

Then why try to fill a gap, at 8000 mt and 2000mt short in the market, letting it rise $10 gives then $80m extra profit with no capex cost whatsoever, adding 2000mt and keeping the price at $40 gives $80 mill extra revenue but their costs are over $40 for that anyway. There is no sense in them adding production, just let the price run.

Customers left them for cheaper alternatives, and it may well bite those end users in the backside if the Chile chaos leaves them buying at future spot prices.

The 150 rule if it comes in was mentioned as a start up point of 2016. looking at Algorta v others, then it seems to add $10 per kg to costs, but $5 would be plenty enough to me.

Other miners states power for pumping stations covers costs 30% of their entire power costs.

You only have to look at Sirocco re power costs. $38 to $41 per kg with the ALP plant running. $25 to $29 with the heap leach (lower production) method. Power for seawater would soon whack their costs up, but they should be under the 150 limit.

Algorta were near their limit anyway and they would need another pipeline to expand materially. The enthusiasm to do that took a big knock over the last year.

[orslega] 12/6/2014 12:57

yes, noticed a 50,000 buyer 10 min ago....a couple of 25,000 buyers waiting in the wings...

[malachey] 12/6/2014 12:51

Since yesterday level two is back looking strong; buying pressure outstripping selling pressure 2:1. It looked exactly the same during the last week of May, when we jumped 20p in a 4day week. Hopefully we will see something similar to get us back to the 70s...

[che7win] 12/6/2014 12:02

By the way, I consider that the stock market looks 12 months ahead, IOF looks very underpriced on that basis to me.

The water business is also another interesting angle that is not priced in at all (which is good!).

[che7win] 12/6/2014 11:58

Meb,
I did a similar calculation yesterday, see below, but for 1000 MT - that seems to be next years target.

It came out as roughly 13p EPS, but really rough, 1500 would be 50% higher but too rich at this stage.

So your figures don't look too far out, I reckon a range 75-100p about right over summer, a jv would alter that considerably in my view though.
If we demonstrate consistent growth, P/E 15-20 would seem fair, especially as the management are looking for 150% iodine growth next two years.

che7win - 11 Jun 2014 - 08:31:02 - 21944 of 22036
Some assumptions coming up:
If we produce 1000mt, iodine recovers to $50kg, our plant costs at conservative $20kg.
Margins would be 30kg, so $30,000,000 profit, £17.6m profit around current exchange rates on raw iodine side.
13p EPS or so, even fully diluted assuming loan notes converted and share options etc, with 150,000,000 shares in issue still around 11.7p eps.
A lot of this fed into the chemical side where margins are improving too, I find it hard to work out why the wider market doesn't catch on here.

[joestalin] 12/6/2014 11:51

Both - a bad winter can have a negative effect on IOF which would probably put even more upward pressure on the price of Iodine.

What I am saying is that there are too many variables that can fluctuate wildly, so I would treat any forecasts with a big pinch of salt. You think the share price could go to 150p - (was it Mr Big who suggested 1.25 by September?)

What I do agree with is that market sentiment will count a lot towards where the share price settles. I think that the recent revelations in Chile could cause a minor panic when it all sinks in - and who knows where things could go.

All I hope for is that the company does not get taken out cheaply.

[meb123] 12/6/2014 11:40

Joe , are you talking about the effect of a bad winter on IOF or on iodine prices generally . OK heres my rough and ready forecast on the share price It is now about 55p . The market looks 6 months ahead and I venture to say that the current share price reflects the expected production rate and iodine prices around $40. Given its an AIM stock , sentiment counts for a lot and as soon as the market gets more confident in the company the share price may well double to say 100p by the end of this year. If we then assume the production rate is doubled to 1500 mt for 2015, i think we could see a further 50% upside during 2015 , which would make it 150p ?

[freshvoicem] 12/6/2014 11:38

I think we can assume gross profit of 15$ per kg.
Therefore 15,000$ per ton
1000 ton is 15m$ gross.
We then need Lance to keep overheads under control.

[joestalin] 12/6/2014 11:30

"Iodine industry sources have told IM that prices for iodine above $40/kg are now "virtually non-existent", bar sales for a handful of small volume, highly specialised applications, after the market softened further in recent months."

Even if we say $40 - we do not know what impact another bad winter will have - so I would be wary of anyone making over optimistic forecasts.

[meb123] 12/6/2014 11:23

I know Joe, but we can make reasonable assumptions on 2 key variables . Firsly is 1500 Mt a reasonable production figure for 2015?. Re price , say $50 median range ?

[joestalin] 12/6/2014 11:13

"is anyone capable of doing a rough calculation of how much profits it can make and what impact that will have on the share price . "

You are asking someone to guess the future market price of iodine given a decreasing number of suppliers.

[meb123] 12/6/2014 11:04

Thats interesting Super . It strikes me that they were never going to meet their original target of 1000mt even diregarding fracking issues etc. It was a bit naughty not to make this clear by the old management .
Obvioulsy we hope that they will be able to significantly increase on 700/800 Mt in the medium term ie 2015 and beyond with the mobiles and improvements etc. if we say for arguments sake IOF can churn out 1500mt for 2015 , is anyone capable of doing a rough calculation of how much profits it can make and what impact that will have on the share price .

[hew] 12/6/2014 10:59

Bocker, re your:

"Ammons, Lance expects an average of a little over 2 metric tonnes a day over a year. When some one asked what a little meant he did not really elaborate - just muttered something about being conservative."

As it is an important point, I confirm SG's comment above that Lance clearly stated that his expected 2 mT/day was a conservative estimate. (I don't think he muttered a response on any topic!)

[battery] 12/6/2014 10:45

Sg,

"Pods do not crystalise the iodine so at pods it's not in a form that anyone can use."

I presume that then also means that the DEA regulatory sign off is not required for the pods like it is with the fixed plants.

[superg1] 12/6/2014 10:39

Ammons

He did say he had to stay conservative. I think the general consensus from 'others' is it will be a 700 to 800 range.

As for io7 or the pads already in, I have no doubt those are higher ppm sites, they said so.

Io2 is always mentioned as a phenomenal site. Other such sites do exists.

As I said Jeff kept muttering about some leases they secured in recent weeks, clearly those must relate to high ppm sites.

They had photo's of the new pods.

One must remember what we once thought pods are like, is no longer the case, they are coming up with design improvements all the time, but the design for the current run is sorted.

I get the feeling they will move away from big plants, but that doesn't mean no big sites. Pods can be left with no staff present happily purring away just like an swd.

Then you just add pods in for the current need of bpd at the site.

EG, if they had 3 pods at one site and another site with better circs pops up, they just move them. Moving big plants is not viable.

Equally if brine rates drop off in one area, they can just move them, instead of sitting and waiting for the partner to sort it.

It does sound like IOF have gone a step further and come up with tech that will drive opex down.

I hear the Japanese would love such tech, and of course there is nothing like it in the industry.

The Japanese have tech in OK but this stuff is ground-breaking in the industry and they know it.

As said io1 is going through a cycle of testing a new chemical process which reduces the amount of chemicals used. From the rns and number crunching I think if came out at a $2 per kg drop, which should grow on economies of scale.

The io plants need 8 staff for 24 hrs, pods need roaming staff dropping in checking all is ok.

Pods do not crystalise the iodine so at pods it's not in a form that anyone can use. It gets shipped to a main plant where the crystalisation process is completed.

The beauty of the pods is cost, efficiency, opex and flexibilty. Then you also have the shut down/fault advantage. If a 30k plant shuts down it's offline. 3 pods doing 10k each are highly unlikely to have 3 shut down together. The whole idea seems to have a big advantage from top to bottom.

[phoenixs] 12/6/2014 10:37

from 10th June. Given the news coming out of Chile, interesting last para in the article.