Iofina Share Discussion Threads

[mister big] 07/8/2014 21:38

I agree with 90% of what you say - however , big business is about deploying huge amounts of capital and massive resources - shell uk is massive including North Sea oil in seventies and eighties , he was Also chairman of BAA - so on the board of three ftse companies .
All others points I agree on -
The skill set required to run big companies totally different .
Arron

[superg1] 07/8/2014 20:33

Helium

I don't want top make a big issue of it, but I think revenue from Helium or the sales of rights for helium is nailed on.

First point. Helium is rare in commercial terms because a certain set of geological circumstances need to be in place, plus an impervious cap to retain it where it does occurs, and nitrogen as the carrier. Then it needs deep fault systems, from memory with something like uranium involved.

The reason for the Rudyard field is the Sweet grass arch, that seems to run up IOf's entire west acreage area.

I say nailed on, because Brainstorm energy talk of Weil resources currently producing helium from the Weil 1 well and another well to go in. Estimates for Weil 1 2 billion cf.

The nailed on bit comes from the mention that they are going to build a Helium processing facility. Those things cost a fortune and thus it's only viable if your are going to exploit the area on a large scale.

Brainstorm have around 6800 acres. From looking at the area of the Sweetgrass arch IOF may have 10 times that surrounding Brainstorm.

Here is the comment from brainstorm and it relates to Weil resources

'We have drilled our first well and production tests revealed commercial quantities of helium and nitrogen. We are set to drill a second well in late 2015, followed by construction of a helium processing facility.'

If Weil are going to commit to a helium processing facility then they will want to maximise helium production throughout the area and acquire rights.
Not forgetting of course that IOF do speciality gases which gas companies far bigger than Weil use.

[che7win] 07/8/2014 15:07

Boggle, B and C are included in plant opex afaik.

[bogg1e] 07/8/2014 13:50

cheers dig and swift. I had forgotten about interest on debt. good one. tax at least wont be an issue for 2014, with all that capex to offset from the past few years $30 mil i think.

[swiftnick] 07/8/2014 13:20

Also don't forget the interest on the two loans.

[diggulden] 07/8/2014 13:19

Boggle, you hit the nail on the head with this statement:

'Yeah Im nervous about any figures really, due to all the variables and lack of detail regarding costs etc'

This is why I no longer attempt to predict revenues and profits, way too many variables until we see the accounts for this year to calculate some actual running costs.

[bogg1e] 07/8/2014 13:05

Thinking of extra costs, there are:

A) Additional admin costs etc on top of production costs/opex
B) Land lease royalties at 3% or 6% of value of iodine produced (i dont know if net or gross)
C) An additional fee to the O&G supplying the brine. Again is this, like the land lease royalty, based on the value of iodine produced, if so, net or gross?

Does anyone have reliable details from the bod etc? Tia.

[bogg1e] 07/8/2014 12:25

Naphar Thanks. Yeah Im nervous about any figures really, due to all the variables and lack of detail regarding costs etc. Theres lease costs too, i havent included those although the basic value per ton on which all the other calculations rest is based on a net value. I dont think theres much further capex to add, most of that was misspent in 2013!!

[naphar] 07/8/2014 12:16

Bog
Re 23378
Don't have much time but a few points.
I like your optimism but I don't think we will get near the profit figures you have posted.
What about Admin costs? Have you covered them somehow? they are not included in iodine opex numbers.
Exchnage rate is nowhere enar that average currently, and I don't think it has been for some time. Aren't we nearer 1.65-1.7 at the moment?
OPEX seems too low to me for the year as a whole, but it's difficult to judge where we might be currently. I know it's 2nd half output weighted but we will have produced a good chunk of the 400mt in H1 when costs will have been quite high per mt, especially so in Q1 with the low output.

Unfortunately, to me it's still a case of next year is more important than this year when it comes to figures and assessing a reasonable share price. To some extens, that will always be the case with a growth company. I am looking that we at least turn in some level of net profit this year, that will be a great step forward when accompanied with the output improvements etc we are currently seeing.

[bogg1e] 07/8/2014 12:14

Also, gong on what sg was saying earlier about water. That the water from atlantis would need desalinating for drilling ops. So am i right in saying that for new wells, they are drilled using fresh or desalinated water, but for refracking or flooding then they can use brine water (i assume cos Chesapeake were diverting Iofinas brine for their drilling). Thanks

[bogg1e] 07/8/2014 12:00

Heres a go at 2014 revenue and share price:

2014 Revenue Estimate and Value Per Share

Iodine Production = 400 tonnes (50 tonnes sold as pure iodine and 350 tonnes sold as derivatives)
Retail price = $42 per kg/$42,000 per ton
Opex = $22 per kg/$22,000 per ton
Net Margin per Kilo = $20 per kg/$20,000 per ton

50 x $20,000 = $1,000,000

Then we add value, to derive the probable IOC revenue

350 x $45,000 ($20,000 + $25,000) = $15,750,000 $ based average

$1,000,000 + $15,750,000 = $16,750,000

$16,750,000 (net revenue) x 10 (conservative p/e) = $ 167,500,000 / 127,314,398 (shares in issue) = $1.31 per share / 1.5 (average US/GBP exchange rate) = 87p per share

[bogg1e] 07/8/2014 11:23

Pls note that if the bod are right in saying that the markup is broadly 45%, then they are getting less per tonne than for thier stated minimum markup per derivative at $10,000 per tonne!! Something isn't adding up.

[bogg1e] 07/8/2014 11:19

HI all, as some of you know i have written an overview on Quadrise. I have also done the same for Iofina, which thanks to the interrim management, completely destroyed all revenue targets etc i had carefully calculated. I have finally got past the trauma enough to rewrite it and am going through basic revenue calculations. Does the following for IOC look ok?

2014 production = 400 tonnes (IOC 350 tonnes + IR 50 tonnes)

According to AGM notes i have the following as the markup for IOC (net I assume) as follows:

$10 per kilo ($10,000 per ton) for low margin derivatives
$50 per kilo ($50,000 per ton) for high margin derivatives
or as an average across all derivatives:
$25 per kilo ($25,000 per ton) or
Net value of produced iodine + 45%

These are calculated as follows:

Firstly the net revenue per ton i have as $20,000, therefore:

350 x $30,000 ($20,000 + $10,000) = $10,500,000 or
350 x $70,000 ($20,000 + $50,000) = $24,500,000
350 x $45,000 ($20,000 + $25,000) = $15,750,000 $ based average
350 x $29,000 ($20,000 + 45% ) = $10,150,000 % based average

Any thoughts? Tia.

[verymaryhinge] 07/8/2014 10:24

nah - a 'bot.

[19bells] 07/8/2014 10:15

Lots of 62s sells odd?

[tackems] 07/8/2014 09:58

Nice to see this board buzzing a bit more than of late with some interesting comments and views. Personally I hope IOF hold onto Atlantis as the future long-term prospects there will underpin the increased potential of SP/company value. By all means look to JV's but not a one-off boost!

[patrich2] 07/8/2014 09:38

Well that water hearing has certainly bought some life back into this share

[king_roster_iii] 07/8/2014 09:21

I spoke to soon - a small tick up. Very decent volume in the first hour of trading.

[bogg1e] 07/8/2014 09:17

sandbag cheers. The thing is we talk of oil, gas and helium and how potentially valuable it is, but it would be nice to have some figures.

[bogg1e] 07/8/2014 09:16

hxxp://www.helium-corp.com/facts/heliumvalue.html

"In 2009, the estimated price range for private industry's Grade-A gaseous helium was between $125 to $145 per Mcf. In 2010, this price range increased to roughly $140 to $160 per Mcf, with some producers posting surcharges to this price. This reflects an average price increase of 11% in one year. With increasing demand and diminished supply, these prices will continue to escalate into the near future."

But what are the costs involved? What is the profit margin on X amount of helium?

[bogg1e] 07/8/2014 09:11

hxxp://www.nap.edu/openbook.php?record_id=9860&page=41

Crude Helium Extraction from Natural Gas

Helium is often separated from natural gases in the course of removing nitrogen to improve heating value. In the United States the lowest practical helium concentration that can economically justify extraction is typically around 0.3 percent by volume. Sometimes, however, the helium is not extracted from high-concentration natural gases and is simply vented to the atmosphere when the natural gas is burned as fuel.

Determining the feasibility of extracting helium from a particular source of natural gas is extremely complicated and is influenced by a combination of technological, logistical, and economic factors. For example, too small a reserve base may disfavor the installation of expensive helium extraction and/or purification facilities. Economic and technical considerations surrounding other products in the natural gas stream and contractual obligations can also affect the economics of helium extraction. All of these factors must be taken into account before a helium extraction site can be planned and established.

Extraction of crude helium from natural gas typically requires three processing steps. The first step is the removal of impurities. Amine and glycol absorption, dry desiccant adsorption, and/or other extraction processes typically remove water, carbon dioxide, and hydrogen sulfide from the gas. The second step is the extraction of the high-molecular-weight hydrocarbons. The third step is cryogenic processing, which removes most of the remaining methane gas. The product is a crude helium typically containing 50 to 70 percent helium, with the remainder being primarily nitrogen along with smaller amounts of argon, neon, and hydrogen.
Purification

Final purification of helium, prior to liquefaction, is typically done using either (a) activated charcoal absorbers at liquid-nitrogen temperatures and high pressure or (b) pressure-swing adsorption (PSA) processes. Low-temperature adsorption can yield helium purities of 99.9999 percent, while PSA processes recover helium at better than 99.99 percent purity (Hwang et al., 1995). PSA can be less costly for gaseous helium but may be more costly where liquefied helium production is desired. The PSA process is widely used to produce specification-pure helium in conjunction with cryogenic enrichment (Hwang and Weltmer, 1995).

[king_roster_iii] 07/8/2014 09:11

Yes ors some very chunky buys this morning. Definitely something or someone accumulating. But not affecting price much - yet ?

[bogg1e] 07/8/2014 09:05

to answer my own question:

hxxp://fortune.com/2013/07/26/helium-soars/ Date 26/07/2013

"With supplies tight, the crucial element's price spikes.
Bo Sears, an oilman from Dallas, has been trying to mine helium for years -- but all his potential investors were stuck on party balloons. "We've always known the value of helium as a natural resource. Our problem has been convincing people to put their dollars behind it," Sears says. "It's hard to line up investors who are wondering why they'd want to fill up a bunch of balloons." The price of crude helium set by the federal government has skyrocketed in the past three years, jumping from $64.75 to $84 per 1,000 cubic feet, as supplies of the element have tightened amid increasing demand, primarily in Asia."

So this is the most recent article i could find actually quoting values for helium. So if i understand it right, the gas would be extracted frrom the atlantis asset and the helium, in turn, would be extracted from the gas. I assume therefore that costs for helium extraction would be hidden within the wider operating/production costs for the gas extraction. Any way around this?

Also, how much helium can be extracted from the atlantis asse? I assume that we will have to see how much helium Weil resources can extract and assume similar values for atlantis, given the proximity of Weil to the atlantis field?