Taking Stock of Iofina

It has been an eventful couple of weeks in the evolution of Iofina (IOF.L) and the fortunes of its shareholders. There has been farce, mixed news flow, officialdom and rumour. Short-term this has left shareholders out-of-pocket and understandably frustrated but taking a slightly longer-term view I sense there is much to be optimistic about.   

New joint brokers were appointed at the beginning of the year and shareholders were rightly looking forward to the issue of new broker notes. Numis duly obliged with a buy rating and 156p price target. It didn’t take longer than a couple of hours for shareholders to work out that the underlying analysis was strewn with errors. After pressure was placed on both the company and the broker a new note was issued the next day correcting the main errors, including a reiteration of its buy rating and price target. But short-term, the damage had been done and investor confidence was injected with a dose of uncertainty.

Interestingly, in the two weeks since this farce was played out institutional shareholdings have risen to 62% of the shares in issue.

The mixed news flow was delivered by way of an operational update on Wednesday. Based on reset investor expectations, this update confirmed that the company are on track with their plan to build and commission two new iodine extraction plants (IO4 and IO5) before the end of Q1 and have begun building IO6. There was a lack of numbers around current production from existing plants, although I was pleased to note that the company will be adopting a quarterly cadence for reporting on production. Confirmation that the company had made its first external iodine sales was undermined by a lack of detail around volume, size and value.

Then, to finish the week off we had officialdom on Thursday as Iofina presented their case to progress their water permit application in Montana followed by rumour on Friday afternoon as word circulated that the engineering deficiencies had been overcome and that the application might be approved for a reduced volume outtake. If the rumour is confirmed officially over the next few days, the share price should continue to recover from currently depressed levels.

So where next for Iofina and its shareholders? Apart from the short-term boost that could come from a successful water permit application, I can’t help wondering about the significance of institutional shareholders now owning 62% of the company. This represents a definite shift of influence away from retail investors in favour of the institutions. Is this a good thing? Hopefully it will go some way to reducing the extreme price volatility that has accompanied this share in recent months. However, it also gives me the sense that there might be some form of corporate activity brewing, although it is perhaps too early to speculate. It could just be that an increasing number of investment professionals have realised what a great value investment Iofina could turn out to be.

One thing is for sure, there are few dull moments being an Iofina shareholder these days.

 Disclosure – I own shares in Iofina (LON:IOF)