Develop, build, own and operate iodine extraction plants
Based on wellhead extraction technology, IOsorb.
Production operations focused on the United States
Record-breaking production levels in 2018
What Iofina does:
The AIM-listed group‘s strategy is to identify, develop, build, own and operate iodine extraction plants currently focused in North America based on its wellhead extraction technology, IOsorb.
It has production operations in the United States, specifically in Kentucky, Montana, and Oklahoma.
The company has complete vertical integration from the production of iodine in the field to the manufacture of the chemical end products derived from iodine to the consumer, and the recycling of iodine using iodinated side-streams from waste chemical processes.
How are they doing:
In early January, Iofina reported a record-breaking year in 2018 in terms of crystalline iodine production following a strong performance in the second half.
The group produced 324.7 tonnes of crystalline iodine in the last six months of 2018, up 21% from 267.5 tonnes in the corresponding period of 2017.
That took the full-year production level up to 588.8 tonnes, up 17% on 2017’s 503 tonnes.
Both the half-year and full-year output numbers represented records for the group, despite operating only four iodine production plants in the period.
The company said the success of its new IO#7 facility in Oklahoma, which opened in February 2018, was largely responsible for the record-busting performance.
Iofina said it intends to replicate the success of IO#7 at new IOsorb sites and added that the sourcing of suitable locations for further plants will continue to be a priority in 2019.
The company expects to produce between 310-330 tonnes of crystalline iodine in the first half of the current year, and as usual, production will likely be weighted to the second quarter.
Last month, Iofina also announced an important restructuring of its debt, with the removal of the convertibility element to its loan notes and an extension of the term loan facility provided by Stena Investment.
Iofina said its debt as at the end of 2018, comprised roughly U$22.37mln of loan notes and US$3.26mln owed to Stena Investment.
What the boss says - Dr Tom Becker, chief executive officer
''Extending the terms of the notes and facility to 1 July 2020 will allow us to continue upgrading and expanding our plants, which in turn will further boost the level of Iodine production. At the same time, the removal of debt convertibility is a huge positive for our shareholders.
“With iodine prices continuing to rise we are well positioned to continue the momentum built over the last few years."
Commenting on the debt restructuring in February, analysts at ‘house’ broker finnCap pointed out that Iofina will incur a higher interest rate as a result and can no longer capitalise interest payments.
However, they added, “this still looks the best outcome that could have been expected and removes a major issue that has been weighing on the shares.”
The analysts said they have delayed the assumed expansions of Iofina’s IOsorb plant by 6-9 months, which reduces their forecasts for the group’s underlying earnings (EBITDA) by 11-12%.”
That reduced their discounted cashflow-based price target for Iofina by 3% to 34p.
“Nevertheless,” the analysts concluded, “Iofina still offers material upside and strong leverage to improving iodine prices and its continued operational recovery.”
Iofina shares are currently trading at 13p each, giving the company a market cap of £16.58mln and offering plenty of upside to finnCap’s target price.