Iofina plc (LON:IOF) said production from its iodine recovery facilities could exceed expectations after a bumper third quarter as it gave an update on the progress at its latest plant.
IO#7 is on time and within budget, the company said.
WATCH: Iofina plc on track to beat second half production guidance
Specifically, all concrete work is complete, the steel erection is 90% done and piping and electrical works are underway.
First production is expected to start next February, barring any significant weather delays.
Production update
In the same announcement, Iofina said crystalline iodine production from its IOsorb plants in Oklahoma continued to improve – and this in spite of the closure of the IO#3 facility.
Output in the third-quarter was 125 metric tonnes, which is around 6% above the total for the three months prior.
This, Iofina said, “demonstrates the company's ability to improve productivity from a lower cost base”.
Will production exceed forecasts?
It also said it expects to meet or exceed its forecast for the second half of 225-240 metric tonnes.
''Against the backdrop of the operational improvements that have been realised company-wide, we are excited to bring IO#7 into production,” said chief executive Tom Becker.
“We look forward to this plant being a significant contributor to our overall production goals for 2018 and for many years to come."
Iofina extracts iodine from brine water recovered during onshore oil and gas production in the US.
Broker bullish
Shares in the company marked time at 14.75p, though the small-cap broker reckons they are worth 20p each.
Analyst Dougie Youngson said: “Once IO#7 comes on-stream next year, the lessons learned during 2017 applied to a new production unit should yield substantially higher levels of low cost production in a stronger price environment.
“This in turn should yield better cash flow generation in 2018.”