Iofina PLC (LON:IOF) said its new IO#7 IOsorb plant is nearly complete and should be online next month.
The iodine extractor confirmed that crystalline iodine production in the second half of 2017 exceeded expectations, clocking in at 267.5 tonnes, versus 216.6 tonnes in the same period of 2016.
READ Iofina jumps as crystalline iodine production better than expected in the second half, new plant construction on track
Production for the whole of the year was up 6% at 503 tonnes from 474.2 tonnes the year before, despite the IO#3 plant being offline for three quarters of the year.
The new IO#7 plant is using many of the assets from the IO#3 plant and should be online next month.
Iofina is exploring options for IO#5, which is currently the group's highest production cost plant. In conjunction with its brine supply partner, it is modelling various scenarios and currently executing field trials to move brine from IO#5 to other IOsorb plants, potentially increasing production at those plants while reducing the overall production cost.
The group is exploring a new additional brine water source at its IO#5 location or repurposing the plant to another site.
Meanwhile, the group has been heartened by the rise in global iodine prices in the second half of last year to around US$24 a kilogram for large orders. Iodine prices have continued to move slightly higher this year and the board expects this trend to continue, as current iodine prices remain below historical levels.
''The board is encouraged by the excellent operational performance achieved in 2017 and the direction in which the company is heading. We successfully executed efficiency improvements at current facilities, which have resulted in the group exceeding 2017 production targets,” said Tom Becker, the president and chief executive officer of Iofina.
"As we enter 2018, we are continuing to strategically expand iodine production by bringing IO#7 into production, a plant which will significantly increase iodine output whilst reducing the group's overall iodine production cost. Iofina Chemical continues to expertly deliver high quality new and existing, niche products to the global market,” he added.
READ: Iofina delivers bullish update; latest plant progressing to plan
House broker finnCap called it a positive update, with full-year crystalline iodine production slightly ahead of expectations that were revised upwards several times in 2017.
Based on this, finnCap reckons the company’s underlying earnings (EBITDA) will have been positive for 2017.
The broker will not be updating its forecasts, however, until the IO#7 plant is online, but noted that with the company looking at repurposing the assets of IO#5 in the same way it cannibalised IO#3 to build IO#7, “there could be further potential production upgrades to come from the existing asset base”.
Shares in Iofina were down a penny at 20.5p, having hit 24p at one stage in morning trading.
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