Iofina Share Discussion Threads

[bogg1e] 15/8/2014 14:20

Hi chaps, Ive amended the 2014 revenue calculations (and may have to again mind you :-)

2014 Revenue Estimate and Value Per Share

Iodine Production = 400 tonnes (50 tonnes sold as pure iodine and 350 tonnes sold as derivatives)
Raw Iodine Wholesale price = $42 per kg/$42,000 per ton
Operating Costs (Opex) [including land & brine royalty payments] = $22 per kg/$22,000 per ton
Net Margin per Kilo = $20 per kg/$20,000 per ton
IOC Added Net Value = $25 per kilo/$25,000 per ton
Interest on debts = $1,275,000
Tax = 35% ($19,330,715 can be offset against it)
Cash Position: $7.3 million

50 (tonnes) x $20,000 (wholesale price) = $1,000,000

Then we add the net value from IOC to the remaining tonnage:

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

Then the two are added together to derive the combined Earnings Before Interest and Tax (EBIT)

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

Then we deduct interest on loans and taxation:

$16,750,000 - $1,275,000 (interest on debts) - $0 (tax) = $15,475,000 net revenue

Now we can calculate a share price:

$7,300,000 (cash) + $15,475,000 (net revenue) = $22,775,000 / 127,314,398 (shares in issue) = $0.179 (Earnings Per Share) x 10 (conservative p/e) = $1.79 per share / 1.7 (US/GBP exchange rate) = 105p per share.

Note: Cash position at the start of the tax year (april) is $7.3 million. Some of this will likely be used within the 2014 tax year. After the review in october we should have a better idea of how this will be spent.

Note: The Lampricide contract for the government is worth $4-5 million, but I do not know whether this is gross income or net revenue. I am looking into this.

[superg1] 15/8/2014 13:26

Neddo

Over to gad.

I did try to read up on it. For copper it seems it helps the breakdown due to the salt, but yes I then wonder about where the waste will go, but they also have that problem with the chemical enriched end product when using fresh water.

My query is whether salt water will frustrate or improve the situation for iodine leaching. My guess is that it is not a big plus as those using seawater like Algorta never mention it. If it was better than fresh water, I can assure you they would brag about it.

The original 150 litre rule says they must use desalinated water, that could be just a media mistake, we'll have to wait and see.

[rhwillcoll] 15/8/2014 13:05

I'm afraid it's going to be used to rub into the wounds of the Chile iodine producers, Neddo (non-technical answer).

[neddo] 15/8/2014 12:55

sg,
what is going to happen to all the salt they pump up in the sea water, no bigger pollutant than that?

[superg1] 15/8/2014 12:26

That brings me onto their recent claimed $22 per kg opex for the last quarter just as they are going cap in hand for a reported $50 mill.

That is just after they reported revenue from iodine would be used to support the lithium side short term.

Q1 they said 25 opex, Q2 22 opex but a clear desire to go back to use of the ALP next year.

However go to higher iodine prices last year, and the final quarter the ALP was in use.

The production rate is virtually the same in both periods.

ALP $41 per kg, No ALP $22 per kg.

But then they add 25 to 22 and come up with H1 opex of 26 by adding in some fog re inventory.

The ALP is power hungry, and no more so I suspect than seawater pumping stations.

Right when they are on their backside and need cash they show 22 in the figures, but want the ALP back at last opex of $19 per kg more.

So in that case, opex per kg when pipelines appear will go up $10 to $20 per kg depending on the amount of our production (low end for SQM etc).

Something clearly isn't right in their figures, it can't be $15 to $20 per kg for power on the ALP. If it was it would be stupid to restart it and they want to add more power use through adding a $15m mill.

Some may not know that Sirocco simply stopped talking about their potash in Brazil and gold in Africa. No explanation ever, they just let it drift. No one ever seems to question them over it.

I did see a media comment recently demanding a valuation of the iodine 'inventory' as it hadn't been done.

Conference call this evening re those guys.

[phoenixs] 15/8/2014 10:28

superg, you ask some very pertinent questions as to the honesty and efficacy of Sirocco/RB. They seem to be in the s....er and appear so say whatever they can to disguise the facts.

[superg1] 15/8/2014 10:07

For those that have been here long enough you may recall the debate over a Sirocco rns.

'The Company will now hold consignment stocks in key geographical markets. The effect on revenues of this new initiative is the curtailment of iodine sales in the second half of Q2 2013 to allow for the build up of inventory and delivery of consignment stock to warehouses outside of Chile. While this strategy will impact/defer sales of iodine for up to six months in 2013, it will allow the Company to be more flexible in meeting customer demand by reducing the delivery time of product from the historic 12 to 14 weeks to 1 to 2 weeks.'

If you recall their were posts to suggest that their claims made no sense at all v production rates. It sounded like their cupboard was bare and they needed to stock up, to stop being forced to supply at lower prices due to the lead time.

What a load of tosh that has turned out to be.


I found 268mt unsold at the end of Q2 from 2013 production, they produced 320 mt in Q3 (total 588mt), but 160mt to add by the time or the rns, giving 428 mt in their inventory at the time of the news that they suggested they couldn't meet demand.

It then gets foggy for Q4 as the RB link up arrives and they don't report the iodine figures.

Then comes a claim of 800mt in the inventory by RB, pre selling 130mt more than they produced this year. Also references to a demand to put a value on the inventory by auditors or the like (I don't think that has been done yet)

It's hard to work out exact amounts, but clearly they had a plenty in the inventory at the time of that mid August news release.

Thus it seems they were talking complete Roger Melly in that news release, which rather backs up the thoughts of the subsequent releases.

Now I understand why there have been question marks over that inventory and answers wanted.

So they had 428 in the inventory at the time of the rns and sold 476mt in H1.

So they had 90% equivalent of H1 sales sat in their inventory at the time of the complete and utter tosh rns comment (as above) and 588mt just 6 weeks later.


Futhermore, just to rub salt into the wounds, they were matching production to sales in 2012, probably due to the demand back then.

H1 13 was a time they actually built up an inventory, but then made that false looking news release in August.

Recently they reported battery grade lithium ready to ship, then reported the customer wanted 55mt per week rates first pre shipping. Next rns said technical grade and since shipped technical grade.

Thus did that battery grade ready to ship stock ever exist?

[gadolinium] 15/8/2014 09:35

Capt:
I am puzzled by the statement in your link.


"Moreno points out that RB Energy has the option of selling its inventory of 800 tonnes of iodine from its Aguas Blancas mine in northern Chile if the markets are not receptive to another financing. If the company gets top dollar for the inventory, it could get as much as $30.4 million (more like $25 million after subtracting costs of production). However, if it has to sell at a hefty discount -- as could well be the case if finds one buyer to take it all -- it could receive substantially less. The company could also choose to sell only part of its inventory."

Moreno obviously thinks 'top doller' is $38/kg which is fair enough. But, I don't understand the comment (more like $25 million after substracting costs of production).
Is he suggesting their cost of production for 800 MT is only $5.4 million, equivalent to only $6.75/kg? Surely it's not that low. In any case if the 800 MT is from inventory surely the cost of production has already been paid for so makes no difference to the amount they actually receive from the sale.
Anybody able to clarify this?

[humanoid] 15/8/2014 09:27

Some light reading for a Friday:

[superg1] 15/8/2014 08:39

Awol

I'm guessing no material change as the guidance for the year was 400mt and is on track.

I would guess they would now wait to see what the combined plant will do.

io2 significant increase forecast.
io4 to get a lot of brine.
io6 new and to get good quantities.
io5 new production.

So they will want actual data to formulate some figures going forward.

It's rumoured any pod action or a further plant etc would be declared for Q4. So again they may be waiting for a decision on the strategy near term.

Then you have the pending water hearing result, which going by leggit's comment is 1 month gone. I too doubt it will take anywhere near 90 days.

So by the time the plants have provided data, the water permit yes or no decision may be upon us.

All speculation but a likely reason imo.

[superg1] 15/8/2014 08:28

SQM

Nothing obvious, the potash price has held, but I can't find lithium data. I did note a turn on a couple of lithium stocks so maybe a lithium price drop, I'll keep looking.

The other reason could be that investors have noticed the potential changes in the water law.

CK

I'm working on that one (RB), some things they have said once again don't add up.

EG the April earthquake affected the ability to ship iodine in Q1. perhaps they think investors don't know the date the quake happened.

It's suggested they need $50m in funding, but on a quick glance, they need to pay a senior debt of $11.4 mill at the end of December, then at the end of June. Plus interest payments on other debt, so at least $30m plus to find by the end of June 2015.

The first 1000mt (approx.)of lithium has already been paid for by Tewoo some time back ($5m and long since spent).

So much of that $50m suggestion is to cover short term debt it seems.

If someone does give them the funds it looks like one hell of a risk to me.

Working on bits re them as some things are not adding up. If the lithium price is on the way down that is serious bad timing for them.

[captain_kurt] 15/8/2014 07:55

2014-07-21

"Moreno points out that RB Energy has the option of selling its inventory of 800 tonnes of iodine from its Aguas Blancas mine in northern Chile if the markets are not receptive to another financing. If the company gets top dollar for the inventory, it could get as much as $30.4 million (more like $25 million after subtracting costs of production). However, if it has to sell at a hefty discount -- as could well be the case if finds one buyer to take it all -- it could receive substantially less. The company could also choose to sell only part of its inventory."

[awolagain] 15/8/2014 07:37

I have asked this question a few times now and was wondering if anyone might have any idea why we have not had a note from our nomad? My guess is they too want to see monthly updates to gauge if the company can deliver??

[superg1] 15/8/2014 07:36

It's suggested, that finally due to lack of action some time yesterday, that the recent supplier is now finished and are out.. VMH will probably have the same view.

I haven't looked as to why yet, but the SQM share price took a hit in the last 2 days. I'll check to see if there is a reason mentioned.

[1madmarky] 15/8/2014 06:17

Mag - where is your evidence for share price volatility? Since we have had monthly updates the share price IMHO has been pretty steady. The reason is that we know exactly what they have been up to. The fact is, IOF have failed to make good on the forward guidance in the past. So as an investor I do not trust them to achieve their own targets. The next 2 months will hopefully enable the company to prove that their forecasts can be trusted. Only then will the company be valued on next year's potential. AIMHO

[magwich] 14/8/2014 22:53

I agree monthly updates breeds volatility in the share price and only suits traders.It is better to know we have 100mt a quarter rather than 40mt, 20mt then 40mt each month, which means on the second month the share price dives. If anyone can list the positives I would like to know?

[bogg1e] 14/8/2014 20:24

mister big, i asked IOF if they would split their costs in the consolidated accounts per division, ie separate costs for production and IOC, but they replied that that is not going to happen. Shame.

For example, we have this lampricide order, worth $4-5 mil, but we dont know if thats income or net revenue, we cant assume that the costs associated are commensurate with likely IOC costs, because its a non iodine product, so i have no way of knowing what the contract is worth in EPS terms.

[mister big] 14/8/2014 20:18

Monthly production numbers are by definition volatile - investors are better focused on medium term progress rather than month by month .
Having said that was some useful info in it which warranted a rns anyway - two new plants on line . Businesses run over years -
I would prefer proper quarterly updates with hard numbers - for instance numbers on the chemical side which looks wholly overlooked . They say near record sales every month - would prefer clean tabulated numbers once a quarter with written update .
Investors do better when they consider they are buying a small chunk of a business, in all my businesses I prefer clarity !
The only business I want a daily report on is the diamond mines because it's just too damn exciting !!!!
Lol
Arron

[bocker01] 14/8/2014 19:58

Monthly updates are mind focussing. For the company's management. Who have to stand up and be counted every four weeks. I like this. Though I understand why management might not. I am pleased with their transparency and willingness to do this. I am also pleased with the steadiness of the share price before today's announcement.

[freshvoice] 14/8/2014 19:35

Super
As far as I can see from the flag counter we had one visitor from Japan, hardly a rush!

Have to agree with Hutt some were really excited a year or more ago when price was MUCH higher than today and were saying 'don't worry, all is well'

But it wasn't why we are cautious now.

As I said earlier we had months of excuses and the one the old management can't duck is

THEY APPOINTED NUMPTY AND NUMPTY to run their and our company.

I hope the delay is showing they are taking more care this time round.

[superg1] 14/8/2014 19:12

Lol

Japan decided to have a look here today probably due to the news.

Then again it could be Ansana, on the iphone, on her latest cycle tour.

[monty panesar] 14/8/2014 18:56

AoN,

Price is factoring in increased profitability in coming months due to higher production figures and also spread of risk due to 6 plants now in operation.

Monty

[monty panesar] 14/8/2014 18:45

Disappointing headline figure but it looks like by October all plants will be close to max production and above the all important 50t per month figure.

[angel of the north] 14/8/2014 18:44

Our highest close since mid May and some people still not happy? I'm well chilled today.

[huttgl] 14/8/2014 18:40

Not exactly in anguish about this but I will 'relax' as far as IOF goes when they have actually demonstrated some consistency over a few months. Anyone looking to use them as a serious supplier to their business with a serious off-take would also want to see this. I am not saying they won't manage this, just that it needs to be achieved to build credibility.

SG - I do appreciate that you put time and effort into this and am sure you are clued up as to the business and current position. You seemed equally clued up a year and more ago if you don't mind me saying.