Iofina Share Discussion Threads

[phoenixs] 21/7/2014 14:10

superg1, thanks for posting that.
It seems to me that Iofina just have to deliver now and to meet and beat expectations to regain the confidence which will result in an share price which will yet again value the company as a growth stock and not just one coming out of "intensive care."

[che7win] 21/7/2014 14:07

Superg, Well researched, looks like RB are in a spot of bother on both iodine and lithium. Bocker, I tend to agree with your outlook, I also agree with cyber that we are way too low here. 75p is the target for me before I say these aren't undervalued.Surely at least one of plants 5 or 6 announced this week?

[1madmarky] 21/7/2014 13:59

Ouch, glad I stayed clear of that little balls up. Cheers SG

[superg1] 21/7/2014 13:55

Rb already have about 70 mill in loans and have payment dates to meet going forward. Chine paid 5m up front for battery grade lithium at a rate of 12000 mt this year.

RBs prior news is confusing as they said they had the product in production but Tewoo wanted bigger volume re shipping. This release looks like they never achieved battery grade (rumour correct) so the prior news release doesn't add up.

Reading the whole release it seems like they will run out of cash very shortly if someone doesn't bail them out.

Not wishing doom on others, but there is 1000mt per year iodine production potentially on the line here.

[superg1] 21/7/2014 13:40

As forecast RB/Sirocco have released news today and it suggests they have problems.

They are already carrying a few different finance set ups and now look like they will struggle.

The recent rumour was they were having issues with lithium grades. It seems the rumour is supported by the details in the release today. The BB seemed unaware of the rumour.

The lithium is starting to sound a bit like those 'wear' comments re the ALP re iodine production.

They look like they are entering that creek where they may lose their paddle.

Today's release

The unexpected commissioning issues encountered with the kiln and with the conversion of technical to battery grade lithium carbonate have extended the commissioning timelines and delayed production of commercial volumes of lithium carbonate for sale. As a result, the Company does not expect to reach its original production targets for 2014. It is now anticipated that commercial production levels will not be realized until Q4 2014 and that name plate production may be delayed until Q1 2015.

The delays in the ramp up of production have accelerated the depletion of the Company's treasury to a greater extent than anticipated. As a result, the Company is working to secure additional sources of funding to complete commissioning, achieve commercial production and realize positive operating cash flow. Management is engaged in discussions with a number of parties including its banking syndicate and strategic and other potential investors, towards an injection of funds over the next few weeks. However, should such funding efforts not be successful, this could result in delay, postponement or interruption of operations of the Québec Lithium operation until a financial solution is achieved.

[bocker01] 21/7/2014 13:39

Well cyber, you seem to be saying that IO1 to 6 are/ought be worth an share price of 70 pence. That's based on current iodine sales prices and a prospective pe of 15. Personally I am not going to argue . We are going to see more plants built, production and sales grow, the effects of Chilean production reductions on the iodine price and of changes in sentiment as IOF continues, as in May and June, to generate cash and profits. Sentiment so often swings widely from one extreme to the other and we have seen both extremes in the last 12 months. I think that the market is still only slowly realising that we are not going to end up bust. Next it will see cash generation and profits. Finally it will give credence to our unrivalled growth prospects, never mind the non-iodine assets. Who knows where the share price will end up? A lot higher than now is my forecast!

[cyberbub] 21/7/2014 12:36

Bocker,100p share price is about USD200M valuation.On a p/e of 15 that's $13M profit. Add a reduced $3M admin cost makes $16M. Add 25% to account for tax (ignoring the offsettable losses available) makes $20M gross earnings.Divide $20M by a $20 margin per kg (ie. $20 cost and $40 sale price) and you get 1 million kg = 1000 tons p.a.Divide $20M by a $30 margin (ie. $20 cost and $50 sale price) and you get about 700 tons p.a.Plenty of assumptions in there to be sure... but a reasonable enough starting point??NAI

[bocker01] 21/7/2014 11:25

Struggling with your straightforward math, Cyberbub. In fact, never known a share that straightforward maths can value! Sentiment over rides everything IMHO. In any event 700 tonnes should be GBP 8m annual profit with no tax. That's the forward level we should reach on or before 25 July when io5 and 6 are online. Rising presumably by around GBP 800k with each strategically positioned mobile on decent ppms plus io7.

[superg1] 21/7/2014 10:08

Those sort of levels cause that 'ping' they mentioned. SQM never ignores anyone that hits 1000mt historically. Interesting to know their thought processes when the day arrives or is forecast. However Japanese interest would probably be more beneficial in the long run.

[cyberbub] 21/7/2014 09:47

Straightforward maths suggests that at $40 iodine, we need around 1000mt p.a. to reach 100p share price. At $50 iodine we could hit 100p at 700mt... which is hopefully the sort of run-rate we expect to be achieving very soon...This ignores water and oil assets etc.GLA NAI

[cyberbub] 21/7/2014 07:37

700mt per year that is :-)

[bogg1e] 20/7/2014 23:10

700 tonnes minimum given normal downtime and optimised brine flow rates.

[magwich] 20/7/2014 22:45

Only just bought into IOF, does anyone know the maximum production we might be able get out of all six plants. It's 40mt out of four so is 60mt out of six the maximum amount we can get? Thx in advance.

[superg1] 20/7/2014 10:06

RB/sirocco circs

"In total all our production for 2013, since we won't be at full production through the year, at least 75% of our production is tied up in off-take agreements," Svela said. "One is a Chinese commodities trading firm called Tewoo and the other, we found fairly recently, is Marubeni."

The deal with Tewoo-ERDC is a five-year agreement that will see a minimum of 12,000 tons of battery-grade lithium carbonate delivered to the Chinese commodity trader. There is a clause in the deal that off-take volumes could increase by 20% in 2014.

In the event Tewoo triggers the 20% clause in 2014, Canada Lithium could deliver up to a maximum 14,400 tons during the calendar year of 2014 and prices will be adjusted quarterly based on actual market prices, Canada Lithium said in the initial release.


So it seems RB should be delivering 12000 mt plus per year now. Recently Tewoo rejected the available supply rate of under 55mt per week, so RB are way below the rate they should be at.

The Maribeni deal was 3 years from Jan 2013 and they were expecting lithium in 2013 but it seems they have not been delivered any and probably won't get any as Tewoo paid 5 mill up front.

The iodine side as we know went backwards too and they let down end users on that side also.

[superg1] 20/7/2014 09:25

Sirocco/RB energy.

As some know Sirocco who mine iodine in Chile became part of RB energy in Canada. RB are a start up in Lithium in Canada.

Over the last year things haven't gone to plan on Lithium or iodine. On the lithium side it seems they have built up debt of around 70 million dollars at 11 percent with paybacks needed but recently extended, they have had some big dilution too.

The main lithium supply agreement is with a Chinese company (Teewoo), they paid 5 million up front, but in recent times rejected supply until bulk delivery is in play (min 55mt per week) that is to confirm the ability of bulk supply at the necessary high purities.
The end goal is 20,000mt per year.

Marubeni of Japan also have a supply agreement for lithium.

The main blog site thinks bad news re delays are coming. Having asked around there are rumblings that RBs iodine and lithium is not up to scratch. RB stated their iodine purity is good when asked. I note they sold less than they produced in Q1.

If RB have lithium purity issues they are in trouble imo as they have a lot riding on success and very little room for error.

So time to watch RB closely as potentially their iodine operation may disappear.

[superg1] 19/7/2014 20:03

Naphar

Just an example of what IOF could do like for like in any efficiency drive, pure speculation.

SQM dumped production when it hit 50 dollars to get to their best possible opex. If IOF did that just to supply their chem div the opex in theory should be at a level where Chile couldn't go 7 years ago let alone now.

As you say profit is profit, I'd love to know what the opex is like at io2 and any pods or further plants at good ppm/bpd rates.

[gadolinium] 19/7/2014 20:00

Super,
I can't fault the logic of your argument as supply is taken out, logic states prices must rise and we are well placed to exploit that rise when it does eventually come. But, right now I am in bearish mood and hunkered down for the long term against the upturn when it does eventually come.

[che7win] 19/7/2014 17:43

We can continue to build out plants as we're doing in time for the upswing.As we supply our chemicals division internally, the raw iodine price hasn't mattered as much. For Iof, they are bringing opex down to low 20s and into the teens, what we need is less fracking disruption to maximise our efficiency which we are making progress on.Mobiles are the way forward for nowimho.As for indmin, I was told they were 6 Weeks behind prices, it does look that indian prices have been stable for the last few months, prices in July are up so far compared to June. Good news that we were profitable last month with stable prices observed.

[naphar] 19/7/2014 17:13

SG
no point in closing high opex plants if they are delivering and profitable, they have to pay back their investment. That would be a very bad decision imo. A pointless exercise just to reduce opex ratio, it will be total profit we judge them on eventually.

[superg1] 19/7/2014 14:48

Gad

IOF have extra production to come via the Capex already invested.

Personally I think the price will rise late this month/ early Aug on the back of decent production or in any case if io5 and 6 fire up.

In general the iodine market is where we have talked about some time back. The 'ifs' re pricing and that some Chile mines would close.

SQM have closed a mine and a plant. Sirocco abandoned the ALP going to 1000mt when the plan was 2000. Recent share price dive for them so we wait to serif there is anything behind it.

Talk of Algorta having pulled back. Talk of Bullmine have stopped mining caliche which should mean at some point soon they stop altogether.

The Japanese more or less have a closed market as their production is in decline.

SQM don't just sell raw iodine they are linked to Ajay and combined they are the largest derivatives supplier in the business. So in theory SQM are no bigger than others in the raw iodine sector. SQM clearly stated in releases they would selling all iodine in long term contracts.

India I suspect are random buyers rather than contracted, and thus what we see is the cheap iodine from Cosayach appearing. The Japanese like many others will be in contracts.

The bit we do see re Cosayach is just 10 percent of the market. Cosayach can not supply the whole market.

There was talk of US Japanese producers struggling on higher prices than this.

SQM can cope with the price as can Cosayach through criminal freebies, but it would seem 60 percent of the market can't.

SQM I believe are playing games with some saying they can cope at 30, frightening others into submission. Yes they have low opex but because they just slashed all high opex production. They can't add to the production levels at low prices.

600 mt demand increase last year and 1000mt forecast this year.

The situation as researched doesn't add up. There are no iodine mines mothballed around the world waiting for a surge in price.

Based on what it out there information online and mutterings then all logic points to a shortage come H1 2015. So in theory the price will have to hit a level where it's viable for Chile and other producers to be able to profit.

For most iodine uses there is no alternative.

Cosayach are crooks, it's that simple, they have low costs through theft and ignoring the environmental laws. I would imagine pre court case they went production mad to build an inventory, but now have pipelines to pay for and eventually seawater costs (the pipeline SQM tried to block). Cosayach are hated and maybe are trying to force others out of business, like Bullmine and Sirocco.

SQM saw it coming and were the first to react on efficiencies.

El Toco and Iris will stay closed under 50 dollars, historical and current action tell us that.

That said SQM have made strong comments about waiting 30 percent of the market back but at low cost opex, not any cost.

If IOF wanted to be efficient in such circs then surely pods would go in at higher ppm sites and suspend all lower rate plants, keep io2 and one of io5/6 (one of those said to be good).

What we would then find is daft opex costs v the market. That was the original plan.

At the AGM they suggested potentially high teens once the efficiency run is sorted. Chop out the higher cost plants and I suspect it would be 10 to 15 dollars.

It was said they would match plants to supply contracts. It's not the price that matters but the margins. Pod options were said to include sites of 200ppm to 1000ppm.

When that potential exists then it must look very attractive to the big end users and producers.

Laura at indmin covers a multitude of sectors, she doesn't do the amount of digging us folk do.

Ioditech, Algorta, Bullmine and others who were all bullish and bragging have gone very very quiet.

At some point the tide will be out, and I suspect many lost their budgie smugglers some time back.

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[naphar] 19/7/2014 12:21

I wonder if it's IOF selling "low volume specialised product"
Low volume for sure.

[gadolinium] 19/7/2014 12:03

Cyber,
The IM article seems to suggest the Japanese will also struggle with prices below $40/kg, which again emphasizes our competitive advantage. However, personally I am now resigned to our share price remaining moribund until iodine prices turn upwards.

It will be interesting to see if/when the low cost supply from Cosayach into Asia/India begins to dry up following the well closures.