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LONDON (Alliance News) - Iofina PLC shares soared on Monday after the company said production rose on a like-for-like basis during the first quarter of the year while costs were "significantly lower", allowing the company to reaffirm its first-half production guidance.
Iofina shares were trading up 70% to 8.31 pence per share on Monday morning.
The company, which produces iodine and iodine speciality chemical derivatives using its IOsorb plants in North America, said production of crystalline iodine totalled 124.6 million tonnes in the first quarter of 2016.
That production was derived from its five IOsorb plants, but the company had six plants a year earlier which meant production was higher at 127.8 million tonnes the corresponding quarter a year earlier. Excluding that plant which is now closed, production in the first quarter of 2015 amounted to 122.4 million tonnes.
As a result, the company reaffirmed its production guidance for the first half of 2016 as it continues to work toward a production target of 250.0 to 270.0 million tonnes of crystalline iodine, which suggests production will have to increase in the second quarter from the first if the company wants to achieve that target.
Production is likely to be higher in the second quarter than the first, as Iofina said production during the winter months is historically more challenging as the colder weather causes downtime at its plants.
Iofina had already said it would reduce production and cut costs in 2016 to mitigate lower iodine prices in the hope it could boost its gross margin.
"In the first quarter of 2016, iodine pricing for large volume users of iodine slipped below USD25 per kilogramme. Whilst not definitive, the board has seen recent signs of price stabilisation across the global iodine market," said Iofina. "The company sees less downside risk for iodine prices in the near term."
"I am pleased by our response to the challenges faced in 2016. Iofina produced more iodine from its Oklahoma operations at a significantly lower cost than the same period in 2015 and is on target to reach first half production goals," said Tom Becker, president and chief executive of the company.
Additionally, Iofina said it has struck a favourable deal with the Oklahoma Corporation Commission, which recently implemented plans to reduce the amount of produced brine being injected into the Arbuckle geographical formation, which could have potentially affected the company's production.
"The actions the board is taking, in conjunction with the company's producing partners, to mitigate future risk and ensure brine supply remain encouraging," said Becker.
Iofina said it has struck a deal that will allow the company to maintain current levels of brine processing at all of its plants "at a minimum," adding that it will be able to "expand volumes to some of our plants," at a minimal cost.
"Even with the Oklahoma Corporation Commission's restrictions and a slowdown of new well drilling rates in Iofina's core area, there remains an abundance of brine for the company's current plants and potential future sites. The company has continued to implement strategies to trim iodine production costs," said the company.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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