MIDAS SHARING TIPS UPDATE: Iofine extracts iodine from oilfield brine
Oklahoma is one of the largest oil and gas states in the United States, producing nearly 500,000 barrels of crude oil a day and enormous amounts of natural gas.
The sector, which employs 15 per cent of Oklahoma’s workforce, contributes $60bn (£48bn) a year to economic growth.
Production is well developed and generates not only fossil fuels but also large quantities of oil field brine.
Progressive: Iofina has pioneered a way to extract iodine from brine, turning dirty water into a valuable resource
Traditionally, this has been considered wastewater. Iofina, listed on AIM considers it an asset.
The company has pioneered a way to extract iodine from brine, turning dirty water into a valuable resource. Iodine has numerous applications.
An essential mineral that promotes brain growth and health, it is added to salt and other foods around the world. Iodine is also used to brighten images in magnetic resonance imaging (MRI) and is a critical element in products ranging from pesticides to preservatives.
Iofina sells pure iodine and related compounds used by manufacturers and industrial companies in the US and internationally.
Midas recommended the shares in September last year, when they were at 23.5p and boss Tom Becker was about to start work on his sixth iodine plant in Oklahoma.
That site is already operational and a seventh is expected to come online next year.
Assessing which locations will produce the most iodine and developing partnerships with oil and gas companies in those locations takes time and effort. But Becker and his team are experienced and well-connected, they know where to look for deals, and they plan to continue doing so.
Recent hard work is paying off. The shares have risen 23 per cent to 29 pence in the past 12 months and Becker last week revealed upbeat interim results, with pre-tax profits soaring 80 per cent to $4.7 million (3.8 million pounds sterling), despite rising costs.
Annual production is expected to reach almost 600 tonnes, and Becker is optimistic of reaching 1,000 tonnes per year by 2027 at the latest.
Iofina’s composite arm is firing on all cylinders, increasing sales and working with clients in sectors as diverse as animal feed and lithium batteries.
Brokers expect strong and sustained growth across the group, suggesting the share price should reach 40p as production ramps up and new deals are struck.
Midas Verdict: Iofina shares have performed well, but should continue to rise as Becker implements his strategy. There is demand for iodine and Iofina’s technology is cleaner and lower cost than many rivals. At 29p, the shares remain attractive.
