Iofina PLC (LON:IOF) said its performance in the first half has been “solid in spite of the difficult events affecting the world” as it updated on production from its iodine plants during the coronavirus (COVID-19) pandemic.
The AIM-listed chemical products group said it produced 284.4 metric tonnes (MT) of crystalline iodine in the first half of 2020, in line with the 286.7 MT produced a year earlier.
READ: Iofina signs senior debt repayment extension
Iofina said its IO#8 plant had reopened in late June after shutting down in May and it expects the plant to run throughout the second half of the year and beyond alongside its four other iodine production facilities.
With all five plants running as normal, the firm expects iodine production for the second half to be between 340-360 MT, noting that prices had remained “encouragingly” steady at US$35 per kilo or above in the second quarter of 2020 and into the third.
Iofina also said that it is continuing to progress a debt refinancing package with a new lender, although the process has been impacted by the pandemic and the new terms are likely to include a term loan as well as a revolving line of credit to meet the company’s debt repayment obligations. Once the refinancing is complete, the company will repay its secured lenders in full.
The group added that it expects to apply for loan forgiveness for payroll protection program (PPP) loans totalling US$1.09mln in the third quarter of the year and that all loans will be forgiven in the second half of the year.
Meanwhile, Iofina said it is monitoring its hemp seed joint venture (JV) with Organic Vines, saying seed sales from suppliers across the US have been much lower than expected due to the coronavirus combined with a lack of a comprehensive USA hemp crop insurance program available to all farmers.
Planting in the US this year declined nearly 60% year-on-year, the company said, with seed sales from the JV through its partner expected to be much lower than expected. While it is not clear when the sales will complete, they are expected to continue into 2021 with a “significant portion” likely to be sold to international markets.
"The first half of 2020 has been difficult for everyone, but Iofina's performance has been solid in spite of the difficult events affecting the world. Iodine prices have remained robust and our production levels compare well with 2019 and, with IO#8 now online, [second half] 2020 iodine production is expected to surpass [first half] 2020 production totals”, Iofina president and chief executive Tom Becker said in the corporate update.
"We are pleased to continue to progress towards the completion of our debt refinancing which will provide us with a clean slate and allow us to dedicate more focus towards maximising our fantastic growth opportunities in iodine and continuing to generate shareholder value", he added.
In a note on Wednesday, analysts at house broker finnCap retained their 32p target price on Iofina, saying that with the recent issues now receding and the plants back in operation the company “can focus once more on the strong growth potential and fundamentals underpinning its core iodine business”, which had been largely unaffected by the pandemic.
Iofina shares were 12.8% lower at 13.7p in mid-morning trading.
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