Higher iodine prices proving a boon for Iofina

Iodine exploration and production specialist Iofina updated the market on its first half activities on Friday, reporting total production of 286.7 metric tonnes of crystalline iodine from its four ‘IOsorb’ plants in Oklahoma during the period, which was up 9.8% year-on-year.

The AIM-traded firm said second quarter output was “significantly” higher than the first quarter production, owing to the first quarter winter weather conditions and an efficiency fall at IO#6, which was now remedied.

It said it expected second half production from its current plants to total between 305-325 MT of crystalline iodine.

During the first half, the directors said they focussed on securing additional capital, and successfully raised £7m of equity in the second quarter.

The funds raised would be used to finance IO#8 plant construction, and accelerate an upgrade programme at its existing plants.

Those efforts would in turn increase iodine production and sales, as well as reduce the company's debt, the board said.

At the same time, $4.2m of debt was converted to equity by Southern Rock Insurance Company.

The group also confirmed that the $3.3m term loan facility was fully paid down at the end of June.

Together with the $4.2m debt for equity swap, the company said its debt had been reduced by $7.5m, which had “significantly” strengthened the group's financial position.

Iodine prices had continued to rise throughout the first half of 2019 due to tightness in supply, in a market which Iofina said continued to see solid demand.

It said iodine prices in the latter half of the second quarter and into the early part of the third quarter were trending upward, with most spot market iodine sales now more than $30 per kilogram, which the board called a “significant rise” since the same time last year, where spot iodine prices were approximately $25 per kilogram at the start of the third quarter.

Additionally, the company said its IofinaEX operation had fully obtained its industrial hemp processor and handler license in the state of Kentucky.

Research quantities of hemp had been procured, and the firm said it would update the market on its progress in due course.

IofinaEX would continue to explore global business opportunities in the cannabinoid market.

Iofina Chemical, meanwhile, had continued to trade strongly in both iodine and non-iodine products.

“The group had a strong start to the year, with many positive achievements including an almost 10% increase in iodine production year-on-year,” said Iofina president and chief executive officer Dr Tom Becker .

“Whilst this was accomplished through four operating IOsorb plants, we continue to evaluate options for a fifth plant, IO#8, which would significantly increase production rates in 2020.

“The successful fundraise in the second quarter has enabled us to pay down our loan facility, and reduce debt further via a debt to equity exchange putting the company in a stronger position.”

Dr Becker said the iodine price had continued to move in the right direction, with the board expecting that to continue into the second half of the year.

“Iofina's newest subsidiary, IofinaEX, is now fully licensed to process hemp in the state of Kentucky and the directors are committed to exploring the isolation of specialty chemical products from hemp, a rapidly expanding market.”