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Iofina plc - 2015 Interim Results
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- 2. Technology Leaders in Iodine® Disclaimer IMPORTANT NOTICE This document,including the accompanying narrative (if applicable) (the “Presentation”) is confidential and is solely for the use of the intended recipient. Neither the whole nor any part of the information in this Presentation may be disclosed to, or used or relied upon by, any other person or used for any other purpose and, in particular, should not be distributed outside the United Kingdom, without the prior written consent of Iofina plc (“Iofina”). This Presentation is the property of Iofina and the recipient agrees that it will, on request, promptly return this Presentation and all other information supplied in connection with the ideas and concepts presented herein to Iofina. This Presentation is designed to provide information about Iofina and its business and operations. It is intended as general information only and is not to be relied upon for any particular purpose. In particular, no information contained in this Presentation constitutes, or shall be deemed to constitute, an invitation to invest or otherwise deal in any securities of Iofina. Although we endeavour to ensure that the content of this Presentation is accurate and up‐to‐date, Iofina gives no representation or warranty as to the accuracy or completeness of any information contained in this Presentation. Accordingly, no liability is accepted by such persons and they will not be liable for any direct, indirect or consequential loss (including without limitation loss of profit) or damage suffered by any person resulting from the use of the information contained in this Presentation, or for any opinions expressed by any such person, or any errors, omissions or misstatements made by any of them. Nothing in this notice excludes any remedy in respect of fraud or fraudulent misrepresentation. This Presentation does not purport to be comprehensive or contain all the information the recipient may need and Iofina does not accept any liability or responsibility for the accuracy or completeness of, nor makes any representation or warranty, express or implied, with respect to, the information on which this Presentation is based or that this information remains unchanged after the issue of this Presentation. This Presentation contains forward‐looking statements, beliefs and opinions which involve risks and uncertainties and actual results and developments may differ materially from those expressed or implied by these statements, beliefs or opinions depending on a variety of factors and accordingly there can be no assurance that the projections or developments will be achieved and no representation or warranty is given as to the reasonableness or achievability, and no reliance should be placed on any projections, estimations or forecasts or the statements, beliefs and opinions expressed herein. In addition, this Presentation contains historical information and it should be noted that past performance cannot be relied on as a guide for future performance. No duty of care or otherwise is owed by Iofina or any of its connected persons to any other person in relation to this Presentation. This notice is to be interpreted and construed in accordance with English law and any claims or disputes arising out of, or in connection with, this notice shall be subject to the exclusive jurisdiction of the English courts. By accepting this presentation you agree to be bound by the foregoing restrictions. 2
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- 4. Technology Leaders in Iodine® Iofina The Company Iodine production from third party brine Specialized chemical iodine derivatives Recycling of iodine from chemical waste streams 4 Iofina plc Iofina is focused on establishing itself as a material producer of iodine and iodine chemical derivatives through its three cores businesses: Processing of mid‐stream third party brine streams Specialty chemical division for vertical integration in iodine derivatives and other halogens Recycling of iodine using iodinated side‐ streams from production processes What drives growth? Co‐produced brine water from third party natural gas and oil wells drives iodine production, which drive the chemical business and allows for some recycling.
- 5. Technology Leaders in Iodine® The iodine industry Iodine Essential for life and industry Global demand exceeding 33,000 MT in 2014 Robust contrast media growth from emerging BRIC countries in addition to an ageing global population New applications for environmental remediation Established catalyst, pharmaceuticals, and biocide markets Continued growth in demand for OPF (used in LCD screens) Primary uses are related to human health and nutrition Global Demand: CAGR 2002‐2014: 4% Worldwide Demand by Sector 5 *source Iofina plc Fluorine derivatives 7% Heat stabiliser 7% Animal nutrition 8% Catalysts 10% Optical polarising film 13% Pharmaceuticals 13% Biocides 16% X‐ray contrast media 22% Others 4%
- 6. Technology Leaders in Iodine® Iodine market Significant potential through diversification of production Chile – 56% of global production from caliche ore SQM (NYSE listed) accounts for 26% of global production Japan – 19% of global production, five producers from gas brine water Production expansion within the country is very limited United States – 6% of global production all from gas brine in the Anadarko Basin in Oklahoma where producers were purchased by the Japanese US imported more than 5,300 MT in 2014 (Source: USGS) 6 USA 6% Chile 56% Japan 19% Recycling 17% Others 2% 2014 Iodine Production North America 23% Western Europe 36% China 8% Japan 7% India 7% Others 19% Worldwide Consumption of Iodine by Region and Country
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- 8. Technology Leaders in Iodine® First half 2015 headlines On track to become a major iodine producer 294.1 MT of crystalline iodine produced (H1 2014: 139.9 MT) 110% increase in production Continued reduction in operating costs Significant improvement in maintenance and repair costs Shutdown of IO#1 Focused iodine production in the Company’s core area 8 Continued global growth in a competitive market Over 10% increase of iodine lbs sold through derivatives on a YOY basis compared to H1 2014 Expanded production capacities of key derivatives Specialty Gas Sales are up 155% over H1 2014 New product development bringing added value to iodine integration Iofina Resources Iofina Chemical
- 9. Technology Leaders in Iodine® Losses reduced to US$467,481 (H1 2014: US$1,303,081); Prudent cost control with cash and short term investment balance at $4,760,784 (H1 2014: $6,270,754); Record EBITDA of US$1,409,329 (H1 2014: US$349,466); Revenue of $11,062,861 (H1 2014: $13,020,185); and Basic loss per share $0.004 9 Financial results 1H 2015 (unaudited) Iodine and Iodine Derivatives Total Six months ended June 30, 2014 (Unaudited) $ $ Revenue 13,020,185 13,020,185 Gross (loss)/profit* 4,074,090 4,074,090 Segment result* 712,549 (1,303,081) *see notes 3 and 4b 2015 interim results Year ended December 31, 2014 (Audited) Revenue 25,848,927 25,848,927 Impairment (1,216,427) (2,522,696) Gross (loss)/profit 2,641,332 2,641,332 Segment result (1,539,329) (6,649,132) Six months ended June 30, 2015 (Unaudited) Revenue 11,062,861 11,062,861 Gross (loss)/profit 2,897,343 2,897,343 Segment result 1,648,457 (467,481)
- 10. Technology Leaders in Iodine® Iofina Resources Business Model Extract iodine from third party produced brine water Water supply still prevalent despite decline in oil price Locate plants at salt water disposal well (SWD) sites Low cost producer Low cost scalable plants Current plants up to 30k bpd Mobile plant designed for up to 10k bpd Produce crystallized iodine and prilled iodine Sell iodine as a chemical derivative or as raw iodine 10 Patented and Patent Pending Iodine TechnologyWater supplied through third party contracts Third Party Oil and Gas Production
- 11. Technology Leaders in Iodine® Proven model WET® with IOsorb® technology 11 IO#2 successfully commissioned in Oklahoma January 2013 IO#3 successfully commissioned in December 2013 Improved extraction efficiency Continuous operation 24/7 ‐ automation added Production area in early stages of large horizontal oil boom IO#4 successfully commissioned in April 2014 IO#5 successfully commissioned in April 2014 IO#5 & 6 simultaneously started producing in August 2014 IO#5 & 6 tower incorporate FRP fibreglass towers in place of titanium IO#2‐6 located within 15 miles of each other allowing staff and resource sharing Brine leasing is on‐going in target areas IO#2‐4 IO#5‐6
- 12. Technology Leaders in Iodine® Significant milestones achieved 12 Exceeded production guidance • 294.1 MT produced compared to original guidance of 220‐260 MT Record Iodine Production •110% increase in production YOY • Quarterly record production of 166.2 MT in Q2 2015 EBITDA positive in H1 2015 • EBITDA in H1 2015 of $1,409,329 versus $349,466 in H1 2014
- 13. Technology Leaders in Iodine® Iofina Resources Iodine production growth 13 0 20 40 60 80 100 120 140 160 180 1Q 2013 2Q 2013 3Q 20134Q 2013 1Q 2014 2Q 2014 3Q 2014 4Q 2014 1Q 2015 2Q2015 Iodine Produced (MT/quarter)
- 14. Technology Leaders in Iodine® Company has been producing high quality Iodine and other halogen derivatives for over 32 years Recognized globally for iodine expertise and product quality Fully integrated with Iofina Resources produced iodine Company owned chemical manufacturing facility located in Covington, KY USA Continues to expand markets served and provide new product offerings Diversified into many different Iodine markets including: Pharmaceuticals Biocides Animal Health Industrial Catalysts Sales of Iofina Resources produced iodine: IOprillTM iodine Crystalline IOfloTM iodine 14 Iofina Chemical
- 15. Technology Leaders in Iodine® Atlantis Water Project (non‐core) Filed for industrial water rights to construct a water depot in Montana for up to 80,000 bpd of water primarily for oil and gas applications Permit preliminary granted in October 2014 Following an objection hearing, permit denied in June 2015 Filed for a Judicial Review in District Court of the file as the DNRC Hearing Examiner’s ruling was ‘a departure of past practices’ of previous permitting procedures Scheduling conference set for October 3rd 2015 Expect Briefs filed by December 2015 with arguments to be heard in January 2016 Ruling expected late Q1 early Q2 2016 The Company will maintain its leases and right of ways but will not put other resources toward this project during this review process Positioned to reopen this non‐core project if appeal is successful 15
- 16. Technology Leaders in Iodine® Goals and targets 2015: Expand production capacity through improved efficiencies and strategic plant expansion Production capacity expanded through improved efficiencies Production target of 220‐260 MT of crystalline iodine in the first half of 2015 Exceeded production guidance for 1H2015 H2 2015 production target of 260‐300 MT of crystalline iodine On track Develop additional products to expand derivative production alongside increased iodine production Additional products developed to utilise increased iodine production Beyond 2015: Continue trend of record production and revenues while reducing iodine production costs Expand external sales of raw iodine Become the leading USA iodine producer through improved plant efficiencies and strategic plant expansion 16 Mobile WET® IOsorb®
- 17. Technology Leaders in Iodine® Iofina Well Positioned for the Future Patented proprietary technology Vertical integration to iodine derivatives market Low cost iodine production 17 A growth company with a unique model for producing a resource with a limited global supply • Partnered with major independent oil and gas companies • Low cost iodine producer •Chilean producers’ costs increasing due to water, energy and labour Vertically integrated • Iodine production and iodine chemical derivatives manufacturer Patented and patent pending proprietary technology • Extracting iodine located at the injection site from brine co‐produced with oil and gas Upside Potential on deep shale rights or if water permit decision is reversed • Atlantis Field • Deep shale rights • Helium • Fresh Water Depot • Pending judicial review
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- 19. Technology Leaders in Iodine® Key Personnel Lance Baller, Non‐Executive Chairman and Co‐Founder Former CEO and President Iofina plc 2010 to May 2013, former Finance Director 2007‐2010 and Secretary from 2007 to 2013 Former Managing Partner of ShortlineEquity Partners, Inc.; a former Vice President of the investment banking firms UBS AG and Morgan Stanley Significant investment, audit and corporate governance experience Tom Becker, PhD, President and CEO of Iofina plc Current President/CEO Iofina plc and Iofina Chemical, Inc. Named President/CEO of Iofina plc September 2014; Named President/CEO Iofina Chemical March 2010 Former VP of Research and Development for H&S Chemical (acquired by Iofina and now Iofina Chemical) Extensive experience in scale‐up of chemical processes from laboratory to pilot to full scale production, global iodine expertise Michael Coddington, Finance Director CFO Iofina Chemical since 2010 Bachelor of Business Administration degree, Finance and Accounting, University of Cincinnati Over 30 years of experience from Controller to CFO for manufacturing and production companies Forest Dorn, COO Iofina Resources Former Member/Manager of Avanti Exploration, LLC.; former Board member and Senior Vice President of Forest Oil Corporation (NYSE: FST; $1.01bn cap) Over 30 years of broad oil and gas experience Kurt Jones, COO Iofina Chemical Over 15 years experience at Iofina/H&S Chemical with various duties including VP Technical Sales and Business Development Global iodine derivatives expert Scott Formolo, Vice President Operations and Geologist Graduate from Colorado School of Mines Experience in iodine exploration, process design, geology, iodine operations, and hydrology 19
- 20. Technology Leaders in Iodine® Iofina Locations 20 Iofina Chemical ‐ Kentucky Acquired in July 2009 IO#2 ‐Oklahoma January 2013 IO#3 – Oklahoma December 2013 IO#4 – Oklahoma April 2014 IO#5 – Oklahoma April 2014 IO#6 – Oklahoma August 2014
- 21. Technology Leaders in Iodine® Atlantis and Montana Water Project Non‐core Atlantis Project Large water resource (35 billion barrels) co‐produced with natural gas and iodine development Issued permit to discharge treated water in adjacent reservoir Water proven to be economically treatable (Low organics, sulfates and TDS) Endorsed by U.S. Fish and Wildlife (USFW) Services for Bowdoin Wildlife Refuge located along the Missouri River Adjacent to new oil discovery and helium production Actively marketing deep rights potential Large acreage position Bakken/Exshaw and Three Forks Shale formations present on 3D data 21 Iofina
- 22. Technology Leaders in Iodine® Wellhead Extraction Technology (WET®) Patented technology WET® Previous iodine extraction technologies rely on the incoming brine stream’s pH being carefully controlled, use hazardous chemicals, and require high CAPEX Brine stream iodine extraction using standard chemicals Extraction agnostic WET® plants capable of handling up to 30,000 bpd Custom designed plant can be built or multiple modular WET® plants can be used together for larger sites New designs for hyper iodine sites and higher volume sites over 30,000 bpd Accelerated return on capital investment Patent for iodine extraction based at the injection site that contains oil and other impurities associated with oil and gas production 22 WET® Chemical‐based (Cold Brine Streams) Chemical‐based method using an anion exchange resin, to which the iodine anions are attracted Method can also be based on a “physical system” for separating out iodine molecules in a physical trap using carbon Pre‐filtration required to handle oil and other impurities Only works on cold brine streams Iodine extraction yields of up to 70% WET® with IOsorb® Handles oil and other impurities without pre‐filtration Iodine extraction yields of up to 98% Produces elemental iodine in the field 50‐450mt per plant per annum depending on iodine content, temperature and brine flow Works on both cold or hot brine streams
- 23. Technology Leaders in Iodine® Corporate History Current structure Incorporated in 2005 and registered in England and Wales under the Companies Act 1985 with registered number 5393357 127,569,398 shares issued, directors and management own 3.54% 100% wholly owned subsidiary Iofina, Inc.‐ Iofina Resources, Inc. and Iofina Chemical, Inc. are 100% wholly owned subsidiaries of Iofina, Inc. Listed on the London Stock Exchange’s AIM market Ticker IOF IPO ‐ May 9th 2008, Gross funds of £15.1m raised a placement at 55p Secondary Offering ‐ Feb 2009, £5m for iodine derivatives business at 55p Secondary Offering ‐ April 2011 of £2.84m raised through a placement of 10.52m shares at 27p, for business development and to drive expansion, the maximum allowable under the Company’s existing authorities Secondary Offering ‐ May 2012 secondary offering of £4.33m raised through an oversubscribed placing of 11.57m shares at 37.5p, accelerate rollout of WET® Iosorb® plants, the maximum allowable under the Company’s existing authorities Convertible bond placement ‐ May 2013 for $15m due May 2017. Conversion price of 100p and coupon of 6.0% Convertible bond placement ‐ May 2014 for $5m due May 2017. Conversion price of 40p and coupon of 6.0% Current Financial Strength Owner of chemical plant and five IOsorb® plants Strong portfolio of intellectual property 23
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- 25. Technology Leaders in Iodine® Board of Directors (cont’d) Dr Thomas M Becker Executive Director, CEO & President Dr. Becker was named President/CEO of Iofina Chemical in March 2010. Previously, Dr. Becker was the Vice President of Research and Development at H&S/Iofina Chemical. Iofina bought H&S in July 2009. Dr. Becker has conducted extensive research in both inorganic and organic halogen based chemistry. Dr. Becker has written a magnitude of published technical papers in his career. Prior to H&S Dr. Becker worked as an Oak Ridge Scholar on behalf of the US EPA and for various other chemical manufacturing companies. Dr. Becker earned a BS in Chemistry from Indiana University, and a PhD in Chemistry from the University of Cincinnati. He has extensive experience in scale‐up of chemical processes from laboratory to pilot to full scale production and is the inventor on several chemical patents/patent applications. Mike Coddington Executive Director, Finance Director Mr. Coddington has 30 years of Accounting and Finance experience in various manufacturing industries. He served as the Group's Finance Director from 2010 until 2013. He was reappointed as Finance Director in 2014. He began his career in 1980 with Cincinnati Milacron, a world leader in manufacturing of machine tools, and advanced to Accounting Manager of the Electronic Systems Division. In 1990 he joined Printpack, Inc., a manufacturer of printed flexible packaging, as a Plant Finance Controller. In 1995, Printpack created a joint venture company called Orflex Ltd., and Mr. Coddington served as Finance Controller for six years. Orflex Ltd. was acquired by DiversapackLLC in 2001, and he served as Corporate Finance Controller until 2010. In February 2010 Mr. Coddington was hired as CFO of our wholly owned subsidiary, Iofina Chemical, Inc., to strengthen the Finance controls, procedures and budgeting aspects. Mr. Coddington earned a BBA in Finance and Accounting from the University of Cincinnati. 25
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