Iofina Share Discussion Threads

[bogg1e] 18/6/2014 16:50

SG, in regard to the iodine going down swds. I take it that the iodine is quite diluted. Isn't the cut off point 60 ppms before the technology costs outweigh the value of the iodine extracted? Ie is it viable to process the brine in SWDs or was the original comment more to demonstrate how much iodine is coming up in brine each year? Thanks.

[superg1] 18/6/2014 16:40

Mr Big

I'd heard the CF rumour way back re Brightside (among a few others) so I believe that one entirely.

I don't know if it's true but apparently a few staff ended up following you.

Water under the bridge.

But as for some other posters with ulterior motives, whether anything has any truth to it is irrelevant, if it fits a motive then exploit it to the extreme whenever possible, and make up anything to support it. No morals whatsoever.

[n3tleylucas] 18/6/2014 16:37

It's not a solid friendship though, born out of necessity. It's still UK v US, and we're 2-0 up cheggers, although that's not good for you.

15p eh? That's £19m of clean profit mate... you are funny.

[superg1] 18/6/2014 16:33

Bogg1e

Most of the planet suffers iodine deficiency India has for some time.

20% of the supply (6000mt) went offline in the Japan quake but temporarily, and the price hit $100 per kg. When the price goes high in some markets like disinfectants end users can use other products, when the price drops they come back as iodine based disinfectant is the A standard.

EG SQM said 2% rises in demand last year, but 3 to 4% this year anticipated. LB at the AGM suggested.

If 20% goes offline, creating a demand shortfall the spot price will take off.

If we take it from 2011 and the steady 3% per year they talk about, then that's roughly 4000mt more demand by the end of 2014 v the end of 2010.

Japan in decline.

Algorta hoped to hit 4000mt, but they are not there yet, however that is there limit, they would need more pipelines to grow any further. In theory they would fill the growth gap that came.

Cosaych were over 6000mt pre 2011, but then went to under 2000, now under 4000mt but hit again, we wait to see how hard they have been hit.

Resources, IOF have a big iodine resource at Atlantis but they have no need to produce there while better commercial options exist.

19k mt going down wells in OK but that is based on 2007 SWD data, by the time this fracking boom finishes it may be double that or more.

If IOF was a big company with the bank balance it seems they could dominate the market. Toyota are in OK and went to Chile as they thought there was no commercial iodine in the US. They will have spotted what IOF have been doing for sure, as will Dow, Misubishi, Mitsui and other very big companies who have iodine in their businesses.

Toyota have found their partner costs are $35 to $38 per kg, They have watched Sirocco backed by the huge Lundin group, with the 'world class' Red back mining team in charge, fail in Chile.

IOF have contracts and circumstances greater than Japan has or had. Japan were the number 1 years back.

There is no way imo that IOF will be left alone, someone will put their hoof in one way or the other and they won't be wearing slippers.

So on the subject of other means re financing, notes etc etc, just look what the Japanese are doing in the various industries. EG in the Algorta case Toyota took a 25.5% stake and threw a load of cash at it. It worked on production but not on opex.

Toyota are in OK producing iodine linked up with US producers, but they can not expand.

At the AGM a few slips had all talking about the Japanese looking at IOF in some form.

I bet you indmin won't be putting out a comment saying that is not the case.

[che7win] 18/6/2014 16:29

Netley,
Surprised you didn't research Mr Big and Dr Fay.
You do know that Mr Big and Lance are good friends don't you?

Eps potential next year could be 15p EPS if iodine price takes off. We would be self building plants at this stage if iodine hadn't underswung, hope that helps.

[n3tleylucas] 18/6/2014 16:19

Okay cheggers you old scrote, give us yer ptp & price earnings ratios for 14, 15 & 16 bud.

[che7win] 18/6/2014 16:02

I see Mister big you mentioned you were buying last night again...

Not surprised, quite a pull back from the highs.

A nice buying opportunity ahead of IO6 going online, any joint venture would also be a massive boost here.

Also glad to see the stock is keen to stay above the 20 and 50 DMA, bodes well.

I appreciate superg's posts on Chile because it all points to the $70 kg iodine price mentioned to me as likely next year.

A month ago, our gross profit was around $10kg or 30% gross profit, now they are nearer $20 or 100% gross margin thanks to our opex falling through better production and operational efficiency.

Next year, if we were to reach $60kg raw iodine sell prices, we could have $40kg gross profit which would be 200% gross margin. Massive potential to throw off large amounts of cash.

[n3tleylucas] 18/6/2014 15:59

Hey Arron,

He didn't sack you... give me at least a modicum of intelligence mate lol

You haven't fallen out with him.

Swearing is great if used in the moment, not liberally.

Xcite Energy have just issued 2yr secured debt against the pre-developed Bentley heavy oilfield at a real 16.66% coupon Arron. lol

[bogg1e] 18/6/2014 15:58

Netters, MadMarky, Che cheers for feedbak.

[mister big] 18/6/2014 15:49

Fab post netley !

Oil / gas play - it might be , and I think the Atlantis field has enormous potential and that might well develop. ( let's hope so)
Re the convertible - if the price rises above 80 p the company can convert to equity , that makes perfect sense.
The stena loan terms are unchanged and repayable in 2017 , so loads of time and no pressure .

As for Chris I fell out with him when he sacked me from brightside and I sold out , haven't spoken for at least 18 months , so the theory breaks down.

I think the Atlantis field could be a massive resource on top of the iodine play .

Arron
Ps on completing a long post without swearing - progress

[che7win] 18/6/2014 15:34

Boggle:

"I think Che7 mentioned that Iofinas iodine chemicals dont require a lot of iodine per derivative."

Not quite what I said, I think you are referring to this comment I said yesterday:

"2: the end product usually uses so little iodine that a price rise has little impact on end prices."

I'm referring to the composition of iodine in the end customers product that we are selling to.

The point I was making is there is a lot of inelasticity in our derivatives prices I.e. Some derivatives are insensitive to changes in the underlying iodine price and iodine commands a high margin.
The reason being that some of our derivatives are specialised e.g. Etching gases, some probably are created specifically for some customers so little competition.

I know a bigger UK derivatives company has been mentioned to me which has a different product set to us i.e. Derivatives quite often is a technical sale rather than about economics.

Hence I thought the Indmin article yesterday was bizarre, as if it was written by someone with zero knowledge of derivatives and clearly malicious.

[1madmarky] 18/6/2014 15:28

Hi Bog. che7win put it much better than I could. The price would rise to a point where supply and demand or the expectation of those where roughly in balance. With what has been posted re Chile, I'm thinking back to the $60's per kilogram. Then higher if demand significantly increases.

[bogg1e] 18/6/2014 15:22

Che cheers. Im sure Fukushima will add pressure to the demand side of the equation; thyroid issues are increasing in Japan and likely to keep rising for however many years, especially in the young.

[che7win] 18/6/2014 15:15

Boggle,
Market economics always dictates prices. If there was a sudden new use of iodine similar to lithium for say batteries, demand would exceed supply.

Price of iodine would shoot up, iodine producers would throw off lots of cash and would use a lot to expand. We could build 12 plants quickly if we had cash I'm sure.

Chile would expand, lower priced uses of iodine would fall and I'm sure alternatives would be sought.

Demand comes and goes in any commodity, just look at platinum or uranium for similar things that happened.

It was iodine demand a couple of years back that set Chile off on expansion in iodine production at higher prices, all due to shortage of iodine supply against growing demand.

As for India comment, I'm surprised you mention it. India would subsidise iodine if necessary, just the way petrol is subsidised.

[bogg1e] 18/6/2014 15:12

Netters, they would need to issue a lot more debt before the sum is enough to guarantee control when converted surely? Or do you see it as a sneaky stealth thing?

[bogg1e] 18/6/2014 15:09

1madmarky, cheers. In regard to a shortage vs growth in usage of iodine. If we have 24000 tonnes output next year, which would be about a 20% shortfall from current global output, would we expect to see a 20% rise in the price of iodine or is that too simplistic? If $40 now thats only $48 per kilo when the shortfall hits, that strikes me as too low.

[n3tleylucas] 18/6/2014 15:05

Bogg1e,

It is my belief that what was raised from Arron was not insurance, and what's more it wasn't enough. I expect more ConBonds to be issued as the true nature of this exercise unfolds, and Arron & Chris take control.

[1madmarky] 18/6/2014 15:04

Bog -1kg of iodine per battery / car. Iof's run rate at the end of this year should throw off 300,000 kg per annum. Electric powered cars are significantly more expensive than a normal car and recharging would be impossible for those who live in flats etc, and some just won't want an electric car. So don't think mass take up of electric cars will happen anytime soon. The Japanese are just thinking ahead and securing the supply chain IMHO. From the presentations 19k tonnes of iodine is going down SWD well each year in OK alone (think that is correct). There will also of course be other battery designs that don't have as much iodine in them so I'm thinking it will just balance itself out

[bogg1e] 18/6/2014 15:00

Ok. Feedback from the agm also included that the $5mil bond from Arron/mister big was not required for future growth and was being kept aside as an insurance. So i assume then that we will hit 80p before future plants are built so maybe you are right. As for the second bond of $15 mil in 2017. I was worried about this due to margins being so low, before Lance returned we were told that costs were about $28 with the cost of iodine as low as $38, which only left a $10 per kilo margin, on those numbers i shat my pants because it really makes the debt repayment + growth impossible. However on $20 per kilo, which is now the case, debt repayment should be possible if by 2016 IOF can produce 2.5k tonnes per year. (Lance mentioned 150% year on year growth, 2014 = 400 tonnes, therefore 2015 = 1000 tonnes and 2016 2500 tonnes), therefore surely renegotiation for the $15 mil bond would be unnecessary?

[n3tleylucas] 18/6/2014 14:40

Bogg1e,

We know Arron's debt automatically converts @40p if 80p is hit. So regardless of what was said or heard, we know the direction. Question is, is the desire to preserve cash making further adjustment(s) to conversion terms... guaranteed?

[bogg1e] 18/6/2014 14:36

Joe all i mean is that if there is big drop in production coupled with excessive demand from new emerging technologies, and India cant physically buy enough or afford enough to prevent a rise in eg thyroid issues for example, would there be a political kickback? Some sort of legal constraint placed on rare elements and their usage? Its hard to think of any other element which isn't generally present in accessible food, iodine seems to stand alone in this regard, so i don't know if there is a precedent. Anyhoo, its not an issue, just thinking a few years ahead when the shortfall really kicks in.

[bogg1e] 18/6/2014 14:31

Fair play netters, the only problem for me is that only one person mentioned the debt conversion issue in their AGM feedback, which means everyone else either didnt hear it, ignored it, overlooked it or the person who wrote it misheard. So can anyone please confirm Lance mentioning a debt conversion? Tia.