23rd Apr 2014 07:09
LONDON (Alliance News) - Iofina PLC said Wednesday it has reduced its production forecasts for the year to "materially below current market expectations" due to its principal operator's planned fracking schedule for the next three months.
Iofina, which specialises in the exploration and production of iodine and iodine specialty chemical derivatives, saw its shares fall by over 50% in early trading, after the firm said it has reduced its production expectations for the current year to around 400 metric tonnes of crystallised iodine after gaining insight into its principle operator's planned fracking schedule for the coming three months.
The schedule is expected to significantly reduce the brine supply and as a consequence, plant runtime for Iofina's IOsorb production plants, IO#3, IO#4, IO#5 and IO#6 will be affected.
Iofina said current indications suggest that the fracking programme will continue through to the end of 2014 at levels similar to those projected for the next three months.
While the fracking plans will hit current brine supply, Iofina remains confident for the longer term, suggesting that the increased drilling is a positive indication of the operator's view to continue expansion, which should bode well for the longer term prospects of the Company.
Plants IO#1 and IO#2 remain profitable are unaffected by fracking schedules and continue to produce iodine as planned, said the firm.
The company said that while the revised production expectations are materially below market expectations, the expected 400 metric tonnes of crystallized iodine is still a significant increase on 2013 production.
In order to mitigate the news, Iofina said it is taking steps to minimise corporate and operational expenses, including curtailing production at IO#5, which is powered by mobile power generation until hard power is installed from the local utility expected in the next 90 days, reduction in staffing to reflect plant down time, reducing production payments to the operator and reviewing mobile plant deployment.
The company said it is taking the measures to conserve its cash position which was USD2.3 million as of the end of March. Iofina is also working on ways to re-route additional water from the operator, it said.
Production for the first quarter was 47 metric tonnes of crystallized iodine and was affected by more fracking than was originally anticipated and extreme winter weather experienced in the location of the plants, said the company. Iofina Chemical recorded a good start to the year and has performed ahead of management's expectations.
Shares in the company were trading 55.16% lower at 25 pence per share Wednesday morning, the biggest faller on the AIM All-Share.
By Alice Attwood; [email protected]; @AliceAtAlliance
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