(Sharecast News) - Iodine and specialty chemicals producer Iofina has executed all agreements with a new brine supply partner to construct its latest 'IOsorb' iodine plant, IO9, in Western Oklahoma, it announced on Friday.
The AIM-traded company described the region as an area of "significant" oil and gas development, with a consequent growing brine supply.
It said it believed the site provided an "excellent location" for its newest plant, which would use IOsorb technology to isolate iodine from the iodine-rich brine stream, co-produced during the partner's oil and gas production.
Iofina said it expected to expand iodine production in the region to create a new core area, and was "actively developing plans" for a second plant in this region.
To minimise supply chain impacts and expedite IO9's construction, the company said it had pre-ordered major items and secured contractors in advance, and would also relocate the equipment from IO5 as part of its building plans.
The firm said it was mindful of the impact of supply chain issues, but currently expected a construction time of six months, after which Iofina would be operating six iodine production plants in Oklahoma.
Once in operation, IO9 would immediately contribute to cash flow, with full payback of costs expected in less than two years, and production of crystalline iodine targeted at between 100 and 150 metric tonnes per annum.
Additionally, as previously announced in July, Iofina obtained a term loan from its banking partner to support the project.
In the third quarter at its five IOsorb production facilities in Oklahoma, Iofina produced 143 metric tonnes of crystalline iodine, in line with its expectations and leaving it on track to produce 255 to 275 metric tonnes in the second half.
"We are delighted to have agreed on the terms to construct our newest iodine plant, IO9, in Western Oklahoma, enabling us to move forward with our next growth phase," said president and chief executive officer Dr Tom Becker.
"With our current IOsorb facilities operating at expected rates, the addition of IO9 will deliver a major step change in our overall iodine production."
Dr Becker said the plant's construction would be underway shortly, while the relocating of the decommissioned IO5 plant would help to both accelerate the project and keep costs down.
"The current timeline will see IO9 online in approximately six months."
At 1026 BST, shares in Iofina were up 3.11% at 21.91p.
Reporting by Josh White for Sharecast.com.
Iofina (IOF)