Iofina (LSE:IOF) — FY23 Results

0:01 Good afternoon, and welcome to the IOFINA PLC Investor Presentation. Throughout this quarter presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time by the Q and A tab situated in the right hand corner of your screen. Just simply type in your questions and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company can review all the questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to submit the following poll.

0:28 I'd now like to hand you over to Tom Becker, CEO. Good afternoon to you, sir. Thank you. Thank you, Alessandro, and welcome to everybody to IOFINA's presentation following our 2023 results. I'm Tom Becker. I'm CEO of IOFINA, and today, I'm with Malcolm Lewin, our CFO. Good afternoon. And I think we'll just jump right into the presentation now. So I'm gonna go quickly pass the disclaimer, but, obviously, it's the general disclaimer that most time you see in these types of presentations. But I'd I'd like to briefly just review the agenda of today's presentation. We'll go through a brief overview of the business. I know most of the attendees today are either shareholders of IOFINA or are familiar with our business model. But for those attendees who are less familiar with our business, we will wanna give a brief overview of our operations.

1:19 As I just mentioned, we recently communicated earlier this month our 2023 results, which we are pleased to have another strong year for the group. And we'll review both the financial and operational highlights of 2023. And we'll briefly touch on the iodine market. We are we are an iodine based company, which we'll get into a little bit before, and, it's a fairly niche market. There's not a lot of information about iodine out there, so wanna be able to give our investors an update on how we view the world. And then really get into, I think, what the heart of what we wanna communicate is, you know, where we've been, what we've done last year, but really where we're going as an organization. Talk about the growth plans and the the the things that we, wish to accomplish over the next, two to five years.

2:09 Okay. Moving right into it. So IOFINA is an aimless specialty chemical company with a specialization in halogen based chemistry. So what does that mean? That means we our core expertise deals with chemistries around chlorine, fluorine, and iodine. And we have a a special interest in iodine because we are basic in that particular raw material, which I'll go through here in a second. All of our operations are in The United States where we produce these specially halogen chemicals, and we produce iodine. We have two core business units. First of which is IOFINA Resources. IOFINA Resources has two main purposes, to explore for and to produce iodine.

2:56 And we do that in the state of Oklahoma in The United States where we have currently six operating plants producing iodine and one more under construction. But how do we get this iodine? Well, it's pretty unique on how we get our iodine. We partner with oil and gas companies and isolate iodine from a byproduct that is produced during their their operations. They when oil and gas comes out of the ground, brine water comes out of the ground too. And in certain areas, there's large amounts of this brine water. And in certain areas of the country, in The United States, there's decent concentration of iodine in those brines. So we explore for where that is. We we partner up with these oil and gas companies, and we put our iosorb technology at these sites where there's large volumes of water and extract iodine.

3:51 And currently, with these six operating plants, we have two core areas in Oklahoma, one where we have five of our plants operating, And the second core area, we're just starting. So we we opened up a new plant last year and are building a new plant in this core area and anticipate, growing that particular area for our iodine production. Now once we produce our iodine from this this stream where if IOFINA wasn't there, this iodine wouldn't ever be isolated or produced, all of that goes through our second business unit, which is IOFINA Chemical. IOFINA Chemical takes this iodine and is either sells it directly to other end users that use iodine, or it produces specialty chemicals containing iodine. And we'll go through some of those types of chemistries that we do at IOFINA Chemical. I will also mention that IOFINA Chemical makes some noniodine based things. We, you know, we talked about halogens. We also make some chlorine and fluorine based chemicals as well.

4:57 So that's kind of what we do. It's kind of we've been a growing company for a number of years, and we're gonna continue to grow these operations here moving forward. So what did 2023 kind of look like for IOFINA? Well, some of the key performance indicators and factors we review as management and directors are on this particular slide. And, you know, I think over the you can see over the course of the five years how our revenue and EBITDA has grown pretty consistently over a period of time. In fact, you know, we've had record revenues for the past six years straight. So we look at these financial KPIs as well as other KPIs with respect to our production, the type of products that we do, and our safety record.

5:44 We, in 2023, created 559 metric tons of our crystalline iodine at those plants that we just talked about, and that was up from 516 metric tons in 2023. So we wanna keep growing this type of ion production. We will continue to do that by, continue to operate our plants and to build new plants

6:10 in these in these core areas, which I spoke about. Other, you know, I think important things as an organization, and and Malcolm will touch on this a little bit here shortly, is, you know, we've done a really good job, I believe, of continuing to grow a profitable business, reduce our debt. And last year, we were in a net cash position for the first time in in a very long time, as an organization. I think some other key things on this particular slide I wanna kinda point out, You know, we like diversification within our organization, not only at IOFINA Resources where we diversify our iodine production by having multiple plants so that there's any kinda ups and downs in any one particular plant, the other plants can kinda make up for those, ups and downs. But also at IOFINA Chemical, we we produce a number of different products that can go out into the marketplace. And and last year, there were eight particular products that had sales of over $1,000,000 each out of our $50,000,000 in sales. That was led by our crystalline iodine, but, there's some other compounds, such as hydroiodic acid, methyl iodide, methyl fluoride, and others, which are large volume, large revenue products for the organization.

7:28 And I think the last thing I wanna touch on is that, you know, we're a chemical company. We're a specialty chemical company. And one thing we stress internally within our operations, which we probably don't discuss enough externally, is our emphasis on safety and our dedication to continually improve our safety programs and culture. Our employees are around or handle hazardous chemicals on a daily basis in our operations, and we're proud of our engagement with our employees to produce these products in a safe manner and to participate in the improvements to our safety programs and how we perform our operations. So moving on, before I hand it over to Malcolm, I get to talk about some of the highlights of last year's financials.

8:24 Again, a record revenue of $50,000,000, strong gross profit, and in a net cash position. And you can see from the chart, we continue to, over a five year period, have good results, within our organization. 2023 was a good year. 2022 was, frankly, an exceptional year, and we look to continue to grow our revenue as an organization and keep moving the company forward. I'm gonna turn it to Mal over to Malcolm right here who's gonna go a little bit more in detail about our 2023 results, provide a little bit of background on why things happen the way they did, and then I'll get back into our operations. Off to you, Malcolm. K. Thank you, Tom. So looking at our profit and loss account for last year on the left hand side, can you see the total sales were 50,000,000 compared to 42 the prior year, so that was an increase of 19%.

9:17 But looking at the breakdown between iodine and non iodine, it's clear that iodine absolutely led the way with, an increase in sales from 31.4 to 41.9. That's an increase of 31%. And as regards those iodine related sales, we shipped just over 600 metric tons, 600,000 kilos of our own produced iodine compared to 440,000 the the previous year. In in terms of breaking that down a bit, two thirds of those iodine sales were actually sales of raw iodine, iodine that comes from our plants in Oklahoma and then gets shipped pretty much direct to to customers around the world. And one third was sales of what we call derivatives, which are chemical compounds that are created at the chemical plant in Kentucky using the raw iodine from Oklahoma and adding other chemicals to create various compounds that that sell for bigger prices than than the iodine itself would sell for.

10:21 Non iodine sales came down about 20% from 10,800,000 to 8,100,000. Again as Tom's already mentioned 2022 was a bit of an exceptional year and we hadn't seen those non iodine sales as high as 10 in in years prior to that. There's there's one key product in there which is an etch and gas that's used for etching chips in the semiconductor industry and we found, more recently that the ordering patterns of that can be quite volatile And, that kind of is reflected in that reduction from 10 back to eight, which was kind of our prior level of sales for that type for those for that category of products. Gross profit came down from 15.8 to 15.7.

11:07 Not a lot, but then again, we did have a much bigger much bigger sales number. And there were several factors that impacted the the gross profit. First dimension is that our iodine our average selling price for our raw iodine had been $71 a kilo in '22, and that fell a couple of dollars to $69 a kilo in '23. Also, we had some negative effects on the cost of sales side. So first dimension is the cost of chemicals that we use at our plants. And in fact, chemicals at our plants account for about 40% of the total costs of operational costs of running our plants. Those chemicals went up by about 20% in price during the year, so that was quite a significant hit.

11:56 Also, we had some higher maintenance costs than we had anticipated. And, also, we brought on during the year a new plant, I o nine. And one thing that we find happens with a new plant, it it actually came on in the middle of the year, and there are some start up and ramp up costs associated with with putting a new plant in. And it tends to take some months before it beds in and settles down to the

12:23 kind of rate of production and and cost profile that is more characteristic of our other plants. So we we so we took some some excess cost there. Moving on down. So that's a 15.7 gross profit. And then we get get down to an EBITDA of 10,800,000. That's after deducting $4,900,000 of SGA, selling general and administrative overheads. And those were $500,000 higher than the previous year, so rather more than simply, a rate of general inflation. And that reflected, amongst other things, some, appointments we've made, to invest in the in the in in the future development of the business. We hired a new sales manager. We hired a new project manager. Actually, in fact, a previous employee who left, went to Amazon, and came back again.

13:15 And that and and the project manager is there specifically to oversee construction of new plants. And we also hired one or two extra people, a geologist, and and we also put some money into a redesign of our website with one key objective of attracting more business to to to our company. So EBITDA was 10.8, 22 22% of sales. Moving on down, not a lot to talk about until we get to we we had an exceptional item somewhat exceptional item last year, which was a credit of $500,000 in '22 for an old provision that got released. So that's somewhat flat as '22 versus '23. Getting down to the tax line, you can see we have a we have a tax charge of 1,700,000 versus 2,100,000 the prior year. Neither of those numbers have any cash flow impact. They are deferred tax, and what they reflect is the utilization of prior year tax losses that that accumulated over time. We've been running through using those losses for a few years now.

14:23 And, actually, as of the end of last year, we're getting pretty close to to being to being through with them. So we're expecting that in the current year, we will start to pay some tax, and that'll continue going forward. Okay. Let's go to the next slide. Here's the balance sheet. So top line, you can see an increase of, what, 4,200,000, which is reflective of building our latest new plant, IO 9, which I've already mentioned, came on came on stream around the middle of last year. Inventories going down to working capital were pretty steady. Receivables are up by $5,000,000 from 10.5 to 15.5, and that 15 number reflects a bunching of sales towards towards the end of the year.

15:20 And sometimes it doesn't take many sales to push that figure up because individual sales can be as high as a million dollars. So net working capital was up by 2,500,000. Working on down bank loans, we have a term loan from First Financial Bank of Ohio that we took on when we did our refinancing in September 2020. That was a $10,000,000 loan to be repaid in equal installments over seven years and as at the end of twenty three there was $5,300,000 left to pay which is three and something years of payments. So that had come down by one so we pay off 1,400,000 a year hence 6,800,000 from 'twenty 2,000,000 becomes 5,300,000 in 'twenty three million And in spite of paying off the some more of our loan and investing in construction of IO9 and other items I'll come to on the next slide, our cash balances increased from 5.9 to 6.5.

16:25 So as Stephan's, I think Tom's already mentioned, that left us with a net positive cash position of 1.2 compared with net debt the prior year of of 900,000. Okay. Cash flow. So we generated from operations, as you can see at the top, 8,400,000, which was our EBITDA profit, 10.8, adjusted for changes in working capital, which were 2.4, if you like, increase in the amount of assets required to finance the operations. So that gave us 8.4 from operations, which was better than last year. Last year, we saw something of an increase in inventories, which was a response to the higher levels of sales. And inventories have, as you've already seen on the balance sheet, kind of stabilized as between '22 and '23. So hence, we we've got rather more cash generated '23 than '22.

17:25 Next item down, CapEx investment. That appeared on an earlier slide, 6,200,000. So that represented $4,000,000 that went into the new I 09 plant. In fact, not only did we spend that last year on that plant, but in the preceding year in '22, we'd already spent 1,800,000. So the total cost of I 09 plant to us was 5,800,000. And we currently see the cost of new plants as being something in excess of of 5,000,000 generally. Also in that number was $300,000 that got spent on the start of construction of the next plant after I o nine, I o ten, which is currently happening, and and we expect to see it come online around the third quarter of the current year.

18:17 Also, was $1,200,000 of CapEx that went into the chemical company in Kentucky, and that type of expenditure is largely for process improvements and some new products as well. So before repaying bank debt, we were net $2,000,000 cash working down the page as opposed to 2,100,000 the prior year. We paid off the 1.4 annual repayment of of the bank loan, left us with 0.6 of cash generated, and that's reflected down below. Cash has gone up from 5.9 to 6.5. And Net, we have the net cash position of 1,200,000. Okay.

19:02 Alright. Great. Thanks, Malcolm. Appreciate running through that and giving the backstory as to a lot of the detail of why those things happened in 2023 in comparisons to 2022. One of the things that we wanted to provide and, frankly, brag about a little bit is where we've where we've come over the last seven years. And, this is a little bit of a complicated slide, but, you know, it it has a number of factors here. How we've been able to, I think, write the organization. You know, you can look on the red and see how the net debt has come down over time and how the adjusted EBITDA has risen over time. And while we and while we've maintained proper cash levels and brought down the, you know, this a key performance indicator for us, our debt to EBITDA ratio.

19:54 You know, frankly, we were a fairly highly leveraged company back in the day. We started to do some basic prudent, expansion once we got our, costs in line for our production plants. We did benefit from an equity raise and a and some debt to equity conversions that help reduce our debt, but we also paid down a significant portion of our debt with the cash that we generated as the organ of the through the organization. You know, once we got ourselves rightsized, now we're at a a new phase, I believe, in our organization, where, you know, with an improved balance sheet, with cash on hand, we were net cash, last year.

20:41 We are going to be expanding our productions at a at a better rate at a faster rate than what we have in the past. In 2020, we refinanced our debt with our current banking partners. I think Malcolm already mentioned First Financial Bank. They've been a good partner with us and continue to be a good partner with us. And so I think, you know, with this, while we never wanna get, ahead of ourselves, I think, we can take a little bit more of an aggressive growth pattern, take on a little bit

21:11 more risk as an organization in order to grow the business here moving forward. So I think now we'll get into dive into our operations here a little bit more and then talk about the IOFINA market. IOFINA Resources, in particular, in 2023 produced 559 metric tons, compared to 516 metric tons from the previous year. You know, the main increase of year over year is that we were able to bring on a new plant, IO number nine. In midyear, there were some there were some ramp up to that particular plant. Frankly, it, it didn't come online at the full run rate as quickly as we as we had hoped, and we've identified the areas for improvement for future plants. And as Malcolm already mentioned, we've we've actually done some some hiring in order to manage these projects in a in a in a more thoughtful way.

22:14 And but we're proud of what we did as a a production. Looking into 2024 in the first half of the year, last year, we made 241 metric tons. We'd look to make at least 275 metric tons in the first half of the year. And

22:33 and and as far as being able to support these operations, I think Malcolm touched on a number of these things. As we continue to grow as an organization, we're expecting to build plants on a regular basis. You can expect plants from us on a yearly basis. Having a experienced person within our group with not only experience in these iodine plants, which are very specialized, there are technology, but also as experience as a project manager. Our our recent rehire will be leading these future plants, such as IO 10 and IO 11 here moving forward. We continue to invest in IOFINA resources not only on the building side, but on our current production from our legacy plants.

23:20 We're investing in additional software development for training of our operators and our safety programs and, you know, also always proud to report that we had no lost time incidents in 2023. Moving on a bit. Talking about the next phase and our expansion of our operations on our IOFINA resource side of the business. So, you can see the picture in the middle of the middle of the slide of our most recent plant that was completed, IO Number 9. It was switched on midyear last year. And, right now, we're in construction of IO Number 10. So IO Number 9 started in a new core area of the business. It's a little bit further south than most of the rest of our plants that are in the state of Oklahoma. It's in a growing area of oil and gas operations, so we believe there's gonna be, solid growing water amounts or at least steady water amounts, that are gonna be available to us at that particular plant and in this particular area.

24:24 And it IO nine was with a new partner for, IOFINA. IO number ten was, started late last year, really got into the construction, meat and bones of it, early this year. You can see a a brief little picture of some of the groundwork that was that's ongoing at IO number ten. We expect this plant to be switched on in q three. Again, it's actually with another new brine supply partner, so we're proud that, you know, these oil and gas operators want to partner with IOFINA in order to gain a valuable asset of this waste product that they're coproducing with their oil and gas operations. And we anticipate this plant coming along sometime during the third quarter, and we'll update the market a bit more on this once we get a little bit closer.

25:13 We do expect this plant to be a good solid, one of our best plants and in line with numb IO number nine with production on an annualized basis once it's up and running and optimized, likely to be between a 100 and a 150 metric tons per year. So stay tuned for updates from us. We'll be using some of our social media platforms to update on some of our IO 10 progress here over the next couple of months. So look for us on LinkedIn and on X or whatever Twitter former Twitter is called to get updates on our progress item number 10. But our item production is only part of our operations. We do have our IOFINA Chemical plant.

26:00 And, IOFINA Chemical is a is a sales division and specialty chemical producer of the group. All of the, sales go through this particular entity. IOFINA Chemical was acquired by IOFINA back in 2009. It's been in business since 1983, so it has a well established international, global reach for its sales division. And, so it moves our crystalline item that we make at IOFINA Resources to, other users of iodine all around the world as well as using that iodine to create, other iodine based products. One of those particular products, which is mentioned here is IPVC. It's iodopropanyl butylcarbamate.

26:52 It is a biocide that's used in paints and coatings and, some machine fluids and also used as a preservative. So it basically prevents your paint from getting mold and mildew in it or either whether it's in the paint can or whether it's on the wall of your home. And, these are the types of, you know, value added products. Just one just one example of value added products that IOFINA Chemical makes. One of the things that the goal for the future of IOFINA Chemical is to add to the amount of crystalline iodine that we push into the iodine derivative products that we manufacture at IOFINA Chemical.

27:37 The graph to the right shows kind of the the mixed uses of whether it goes whether we sell our iodine, it's strictly our crystalline iodine directly to end use customers, whether it goes into iodine derivatives and also shows our non iodine derivatives, which gives us, some nice, diversity of products that we that we make. But we are investing in r and d at IOFINA Chemical. We're investing in our plant, and we, completed some process improvements for that IPVC process, created a new I p c IPVC formulation that went to market late last year. We are expecting a new iodine based animal health product to be in full scale production in 2024 and in smaller scale production here over the next number of weeks.

28:25 So, our goals are to as we are expanding our IOFINA chemical operations to be able to grow our IOFINA chemical unit and the amount of iodine that are used in iodine derivatives that are produced by IOFINA chemical, grow those as we grow our iodine production on the resource side of the business. And in order to do that, in 2024, I think Malcolm hinted at some things that we did on the sales and marketing side of the organization. As we continue to grow, our management team recognized that we needed to improve and strengthen our sales and marketing strategy and team. So we as I mentioned, IOFINA Chemical has been around for a long time, but we really haven't invested too much in our sales team over the last number of years. So we actually hired a new sales team leader in 2023.

29:29 That hires has helped drive our our growth strategy. As we continue to grow, we need more opportunities to move our products into the market. So getting a larger reach, of our products, not only by manpower, by having a larger sales team, but by utilizing more modern technical ways of reaching customers are important aspects of our strategy here moving forward. And it's already paid dividends to us as an organization. We'll continue to use traditional kind of methods to reach customers such as trade shows,

30:06 but, we are using other more technical ways to reach customers through, social media platforms and, improving our website. You'll see a new and improved IOFINA website likely in the next few weeks. And this website, and some of the things we've done in the background on our current website has already provided us some additional opportunities as an organization. And by adding sales and marketing opportunities, we've already added, customers in new regions and are getting qualified at additional customers in, in areas where we haven't sold before. So some focus for us, moving forward are getting some iodine, derivative increases in North America sales, but also expanding our sales, especially of our crystalline iodine into Europe and in the Asian markets.

31:06 We do a fair amount of selling of iodine currently in the Asian markets already, but there's new opportunities where we're going through qualification. And we've, also recently had some significant new sales into into Europe over the last number of months. So, we continue to utilize our particular sales force, but we know we're not a large company, and we will continue to utilize agents and distribution networks, especially in certain countries to reach some, some key international customers. Just going back and touching on the iodine market a little bit. This is a slide that you've if you've been with IOFINA and and looked at been with some of our presentations before, you've seen a version of this slide, which which shows in the yellow the trends of iodine price over time, the 10 the trends in red of the the the amount the size of the iodine market over a particular time. And you can see iodine is about a 37,000 metric ton market.

32:13 Most of the world's iodine is produced in Chile from a hard rock mining operation. The USA produces about 6% of the world's iodine, although it consumes a a much larger percent of the world's iodine. The highest demand currently for iodine is in Asia and in Europe, and that's where iodine demand is growing. And in particular, the applications where iodine tends to grow and have been growing over the last number of years and will probably drive the growth here over the next couple of year are human health care applications. And, especially, it's led by the largest use of iodine, which is X-ray contrast media injectable drugs. So these are drugs that are formulated, and doctors will use them to improve the visibility of blood vessels and organs in certain X rays and CT scans.

33:06 And this is a continued growing use of iodine. As certain countries of the world get better health care systems and provide these types of modernized, opportunities to, more of their population, this application is expected to continue to grow. The market last year was fairly flat to slight slightly down. There were some applications in the automotive industry and some animal health industries that were slightly down, but we expect the market to recover in 2024 to likely near the 2022 kind of levels. Pricing has held up. It's been relatively stable over the last eighteen months. Current pricing in 2024 as we speak now is in the mid to high sixties, and that's and that's the kind of range that we saw at the end of twenty twenty three. There's nothing in the market that we see currently that's is likely to affect iodine prices up or down here in the near term.

34:14 And so we anticipate moving into the second half of the year, these types of prices of iodine that we that IOFINA will be able to achieve. So, near the conclusion of this, slide, I wanna talk about, you know, what what's next for IOFINA? What's what's our growth opportunities? We stated within the last two years that one of the major goals for IOFINA is to become one of the largest players in North America and to double our production from twenty twenty one year end levels in the in the next few years. And how are we achieving this? We're achieving this organically by building new ivine plants, at a at a faster rate than we've done in the past.

35:06 Item number nine became fully operational last year. As we've mentioned a couple of times this year, IO number 10 is in construction and should be online next quarter for the group. But I'm not gonna stop there. We anticipate these types of ISOR plants at at least one per year kind of basis here moving forward. And we're very far along with our IO 11 negotiations and have multiple opportunities at multiple sites, frankly, with multiple oil and gas operators to build these plants here moving in the future. So we're working with these operators to find the right deal for both entities to have long term agreements for future plants here moving down the road. So on the IOFINA resource side, we'll continue to to organically grow our operations.

35:56 And on the specialty chemical side, we're investing to, in our r and d efforts. Our our new investment on our sales team has brought some new projects to the organization, which are ongoing on our r and d side. And I mentioned, you know, we do anticipate a new item based animal health related product for us, having some sales, especially in the second half of this year and into 2025. So down the road, what's next? Also, Potentially looking at new ways to control brine that goes to our not only to our new plants, but to our legacy plants, potentially even reopening up old production wells and converting them to brine wells.

36:44 We're looking at those kind of operations. We're looking at also potential inorganic growth opportunities. So as we've mentioned a number of times, you know, we're a much better position financially as an organization. We are growing at a faster rate organically than we have in the past. And it's also imperative that we look at inorganic growth opportunities. So examining other other business lines, whether their particular product lines that would fit into our type of technology, whether the halogen based chemistries or sell into the same type of industries, or whether we would look even at, some other m and a kind of add ons to the particular group. Those are some things that, we're looking at. Nothing is imminent at this point.

37:32 But, as as an organization in our in our growth cycle, those are the items that we are looking at. So as we conclude this, this portion of the presentation before we get to question and answers, I think, you know, we've come a long way in 2023. We produced, you know, 559 metric tons of crystalline iodine, and we will have a a new record amount of iodine produced in 2024 for the group with I o nine coming online last year and I o 10 coming online this year. The price of iodine has remained steady in mid to high sixties, and that benefits IOFINA as a core iodine producer. We're on track to complete IO number 10 in the third quarter, adding another 100 plus metric tons of capacity on an annualized basis, once we get moving forward. And we're not stopping there, and we're gonna add additional plants here moving forward in order to meet that goal of doubling our production from 2021 level. So I think the future is bright for IOFINA. We're gonna stay focused in our core technologies.

38:42 We're gonna stay focused in producing more iodine and iodine derivatives, invest in r and d, to make sure that we can add more value added products on the IOFINA chemical side and continue to grow as we've done over the over the last number of years. And with that, I think that ends the, the presentation portion of our our talk today, and I'll throw throw it back to IMC. Perfect. Tom, Malcolm, thank you very much for your presentation. What I'll do is I'll just bring your cameras back up at this point. Ladies and gentlemen, please do continue to speak your questions just by using the Q and A tab which is situated on the top right hand corner of your screen. But just while the company take a few moments for you, there's questions that have already been submitted today. I'd like to remind you that recording of this presentation along with a copy of the slides and the published Q and A can be accessed via your investor dashboard.

39:31 Tom Malcolm, as you can see, we have received a number of questions both presubmitted and throughout today's live presentation. And if I could just hand back to you just to read out those questions and give responses where it's appropriate to do so, I'll pick up from you both at the end. Okay. Yeah. Looking through the new questions here. So we will we will try to attempt to go through the questions that are appropriate for us to answer. We'll start with the presubmitted questions that were sent to us before the before the presentation started. And the first question basically asked, has the company considered finance or sorry, franchising its operation elsewhere in the oil and gas world, for example, in The Middle East? And the the quick answer to that is we have looked at opportunities, partnerships, consulting opportunities in other areas of the world outside of, America, including some Middle Eastern opportunities.

40:30 Many of these opportunities, from what we have seen, contain lower concentrations of iodide in these brines that we use our technology to produce our iodine. However, you know, there are actually iodine plants near the Caspian Sea in Turkmenistan, Azerbaijan, and Iran. So there are possibilities to be able to use our type technology in these areas. The ownership of these brines in in these regions can cause some difficulties and are are more difficult than where we are today in The United States. It would any kind of deal like this would need to be a prefer preferred long term project with with good paybacks for IOFINA, and we will continue to explore these opportunities if the right deal is realized. However, I think I can say we're really focused on our operations in The United States and the existing possibilities of expansion, both in our core areas that we're operating in Oklahoma and in other areas outside of these core areas and other states of The United States.

41:34 So I think that's where we stand right now. Second question is, does IOFINA still enjoy the water transfer arrangements, and so can it be used or sold? Also, I'd like to hear any comments on the gas fields noted several years ago, and can it be exploited to profit? I I think this question refers to some old legacy projects that were involved with IOFINA in the state of Montana about fifteen years ago when we IPO ed as an organization. These were uneconomical, gas wells and gas fields that were in the state of Montana, and the leases have have been allowed to expire here. Under with current prices of gas in The United States, which are much lower than what they are in Europe, these are uneconomic wells. And these wells have been plugged, and we no longer hold those leases as a organization. There was also a a a water project that was discontinued in 2016, and we really have no plans to continue any of those types of products. But we will be but instead, we are really focused on our new our not our new, but on our core businesses of halogen based chemistries, iodine production, and expanding those kind of operations.

42:49 The next question is when do you think, notwithstanding expansion challenges, when does the board think that a maiden dividend would be paid? We we we get asked by investors at this point in our this is in this point of our where we are as an organization about dividends and with our improved balance sheet and with solid results. And the board routinely discusses at this particular time the possibility of paying a dividend or potentially buying back shares. But I can say at this point in time that we have determined that I currently, best course of action, we believe, is to continue to reinvest cash into these expansion projects.

43:34 We have a number of projects to create iZOR plants to create new iodine based derivatives. I think cash is best used at this particular point in time to, reinvest in these rapid payback kind of projects. I can't give you a specific time line at this point for when we could be paying a dividend or do buybacks with the board. We'll continue to discuss this possibility. The next question has to do with expanding our sales strategy to to tackle new markets and how we're looking to do that. I think we touched on this in the presentation pretty significantly, but, yes, we continue to as we continue to grow our item production, it's imperative that we expand our reach, both, not only the direct sales of iodine to existing customers and new customers, but also increase the amounts of iodine used in the iodine derivatives that we produce. So to do that, we've added to our sales team, and you'll see it as as I mentioned, you'll see a new improved website in the coming weeks to provide more leads for our organization.

44:38 But we are already currently selling to new customers. We're talking to additional customers that use iodine in order to gain long term commitments for, our crystalline iodine that we produce as we as we continue to grow, our operations. K. Moving on a bit. What are the both the organic and inorganic opportunities for IOFINA? And, again, I think during the course of the presentation, I hope we covered some of these, things. But, you know, our organic opportunities at IOFINA include, you know, expansion of our core competencies. We we know what we know how to do, produce iodine, produce iodine derivatives, produce chloro and fluoro based derivatives, and we'll continue to expand our operations organically in those areas. Our item production will expand including new plants in our current and core areas and likely into new core areas within The United States, and those are likely to be with some current brine supplying partners and with some new brine supply partners.

45:47 IOFINA Chemical will be expanding the the current products and developing new products that we that we tend to sell here moving forward, both iodine based and chloro fluoro based opportunities. The organic opportunities, I think we touched on in the presentation, include potentially adding on just our specialty chemicals division, whether it be by product lines or even other businesses that have similar types of chemistries that we do or sell into similar areas that we do, which would be add ons to our particular product mix. So while there's nothing imminent on the inorganic side, I think, we're we're very focused on growing ourselves organically and looking for the the right opportunities to potentially grow inorganically if if it made sense for IOFINA.

46:42 The next question and some interesting questions here is how do you plan to expand production levels as you have stated? And and and do you have the appropriate sales channel to funnel the production? And I think we've covered this question here a little bit already. We we expanded our sales team and and our customer base and the regions where we're selling our products. We continue committed and have ongoing talks not only in the short term for for long term sales into these particular markets. And I I think, in addition, we are developing more iodine based products, and we'll process more iodine through derivatives as we grow our production so that we get that add on value of our iodine derivatives. We're we're comfortable with the progress that we have so far. And with respect to, you know, our expansion of our sales network as we, expand our production.

47:39 So, the next question asks a little bit more specific. So it it asks what are the main derivatives and nonproducts of iodine as stated in your annual report. So touched on a little bit of this in the annual report, but our, you know, our largest single sales item is the crystalline iodine that we produce, which is directly sold to other manufacturers of iodine based products that IOFINA does not produce itself. But some other top products that we produce are hydrolic acid. Hydrolic acid is a it's an acid which has agricultural uses and industrial applications. Another top selling product for us is methyl iodide. It's a compound that's used in many different organic syntheses of other compounds, including synthesis of pharmaceutical in in pharmaceutical applications, usually multistep processes where a methyl group needs to be added in the synthesis in the synthesis.

48:43 And, methyl iodide is also used as an industrial catalyst in the manufacturing of acetic acid. One of the top non iodine, products, which I think Malcolm mentioned, is chip etchant gas called methyl fluoride. It's used in the semiconductor industry and also has some other specialized synthesis applications as well. And I think I already mentioned IPBC, iodo iodopropanyl butylcarbamate, which is a, it's a biocide that's used as a as a as a biocides and paints and a preservative and some cosmetic applications. We sell iodo four concentrations. So these are concentrations that go into the agricultural uses such as teak tips for cattle, for disease prevention. We and we manufacture some other, another non iodine biocide, which benefits fisheries in North America. So that hopefully, that gives you a flavor of the different types of products that we, manufacture as an organization. We're looking to expand those product offerings, and, we mentioned that one of those is another annual application, IOFINA based product here in 2024.

49:55 Okay. So the next question, do you expect future new plants to be financed by increased income, profit, or by increasing company debt? So I think I I have to answer that in a in a little bit of a combination way. I think it's likely that future plans will be a combination of financing by our by our cash. But, also, I think to meet the goals that we have, which are a little bit more aggressive than we had in the past, it's it's likely we'll take on a bit of new debt. It'll depend on the size of these new plants, size of the opportunity, as well as the frequency of how we build these plants. My view, and I I I think our board's view, is that debt is that's not bad as long as it's controlled and is is in the appropriate size.

50:46 And, you know, a key performance indicator for us is to have a healthy debt to EBITDA ratio. But at the same time, taking on a little bit of debt to meet expansion priorities As long as these projects have good payback on on the particular projects, I think it's a healthy healthy for organization. So it's likely to be a combination of financing not only by the income that we are producing, but also, likely taking on a bit more debt here in the future. And then, the last question that was presubmitted has to do with, as the company share price, the the author seems to think it's currently undervalued.

51:32 I would agree. And would you consider share buybacks or dividends? And I think we covered this point in an earlier question. I think the board is considering dividends and buybacks. At this particular point in time, it's an ongoing discussion at the board level. But right now, we are using cash to invest in the expansion of our operations. Let's see what, what questions we can take on here that were submitted during the presentation, and I don't think we'll be able to get to all of them. But one of them has to do with the a new an RNS that we put out recently. So it says, recently, you signed new brine supply agreements for two of the current sites, which has led to lower margins.

52:21 It's likely recurred at the other sites. Do you see expectations for EBITDA in the future? So let me push a couple of comments. So the brine supply agreement that was resigned here here recently basically rightsized those particular agreements. Over the last number of years, because of the terms of those particular contracts, they really benefited IOFINA and weren't what I would call a good partnership agreement. Whenever we do deals with Bryant Supply Partners or, frankly, any of our partnerships, we wanna have agreements that benefit both parties.

53:07 The way the structure of the contracts were written is that IOFINA really benefited from the brine supply agreements of these two particular sites over the last number of years, and we're out of line with the norm of our brine supply agreements with other suppliers to our plants. Now that these have been rightsized, I think while we did take a while we would be taking a reduction in our EBITDA, it's it was the right thing to do for a long term partnership with these this particular supplier. With respect to the other agreements, these are already rightsized. I don't anticipate any other kind of changes in those agreements because they are good partnership agreements as written.

53:56 Next question is, has the company have the capability to construct more than one new plant at the same time, and are there considerations of having overlapping product projects. We do have the capability of doing that. We don't wanna get ahead of ourselves too much. We do have a goal of of doing at least one particular plan at a time. Will we be we haven't done that so far in the past back way back in the history of the organization when we tried to build multiple plants at the same time. Cost overruns happened, they we weren't prudent in where we had built some plants way back in 2013, kinda time frame. We have learned from that. We don't wanna get too far of ourselves while we want growth.

54:43 We wanna make sure that we, control costs so we don't, burn through cash too quickly. So right now, we have not overlapped these opportunities. But if the right opportunities come into play, we will consider that here, moving forward. There's a quick question of what the payback period is on a new plant. Well, it depends on the plant itself. The payback opportunities are in general. We model to be less than three years on a particular plant, you know, and likely to be, lower than that on on a realized basis. But it depends on the size of the plant, what the amount of water that comes to those plants, what the intricacies are in building the individual plants.

55:31 For example, there's some chain there's some differences in the I o nine plant and I o 10 plant depending on, you know, where the water is sourced from our partner. So that can change the costs upfront of those individual plants. So but in general, the these plants have a less than three year payback. Another question is, I've had experience in the past with IPVC. I noticed you ramp up production of this derivative. How are you managing increased environmental risk for these new production levels? So I don't I I guess my quick answer to that is that, you know, we've been making IPVC, for almost twenty years at this, particular site.

56:22 We understand how IPVC is made. There are certain applications for IPVC that have continued to grow. There's other applications that, have been more steady. The there's always environmental risk in any kind of chemical that we produce, and I think we manage those very well. We'll continue to build IPVC production, but we also know that there are risks with any particular derivatives that markets can go up and down, and that's why one of the reasons why we diversify ourselves with multiple types of iodine based derivatives. So if the IPPC market goes up, we can meet that need. If the IPPC market goes down, we have other derivatives that we are either currently producing or currently developing developing, which can move iodine into those particular derivatives.

57:16 The next question has to do with profit margins at IOFINA Chemical after the cost inflation of raw materials in 2023. So I think it's probably in reference to some of the information that we put into our annual report saying that there's some significant cost increases of what it what it costs us to produce everything that we produce. So, frankly, in 2022 and 2023, those basic raw materials of basic acids, base generalized bases and oxidants have increased significantly and and and have really increased significantly over the rate of inflation here in The United States. Have we recovered profit margins? I think most of those margins on the chemical derivatives that we produced at IOFINA Chemical has been able to be passed on.

58:12 For our iodine production, that is a a net increase in our cost of production to, to produce iodine. And and the price of iodine is not controlled by IOFINA. The price of iodine direct sales are controlled by the market. So increased chemical costs do decrease the margins of direct sales of iodine as a group, but, the increased cost of those other chemicals for the chemical derivatives can mainly be passed on. Are we seeing, increases in 2024 at the same rate as we did in 2023? The answer to that is no. We've we've seen a stabilization in those raw material costs, although, you know, the outlook here moving forward, although inflation has reduced in The United States, the cost for these particular chemicals have been you know, it's it's not necessarily clear how they'll be moving forward.

59:09 These chemicals can be very regionalized in their costs. And depending on, for example, at our IOFINA resources plant, if if certain of the chemicals that we used are in high demand by the oil and gas industry, that could raise our costs. What do we do to try to minimize that is we we get into supply agreements with our major suppliers so that we can try to control those costs on a on at least a medium term kind of basis. And, before we before we end, we can take one or two more questions. Let me look at some of the other questions. Let's see. Yep. How how competitive is IOFINA compared to his main competitors now?

1:00:03 I think the quick answer to that is, one of the things that IOFINA is doing compared to its competitors is continuing to increase its its production. I think of cost to produce iodine for all the iodine manufacturers around the world has gone up. We've talked about these, chemical costs that go into the processes. That's not exclusive to IOFINA. That's that is also gonna be felt by all the other iodine manufacturers around the world. What separates IOFINA is that, you know, our business model allows us to produce new plants on a rapid base, on a quick basis. We can get a plan online between six and nine months once we really start breaking ground.

1:00:51 It has rapid payback. We are, I believe, in a relatively good cost position compared to other manufacturers around the world. And we have a model that we have, you know, multiple plants producing iodine. So I think we're very competitive on how what our cost structure is and and how we are growing at a prudent rate here moving forward. And let me find one more question before we end. You know, new with new plant CapEx now at about 5 plus million, what's the expected payback? Sorry. We we we already kinda went through that. I think paybacks are generally three years for these particular plants at current iodine prices. So with our production costs, and and to get a, you know, a a plant that's gonna be producing a hundred and hundred fifty metric tons, you know, we can get payback within a three year period of time. I And think I think we'll end the session there. If there's other questions the company is able to answer, we'll do that at a later time.

1:02:01 Perfect. Malcolm, thank you for answering those questions you can for investors. And, of course, the company, as mentioned, can review all the questions submitted today, and we'll publish those responses on the investor meet company platform. But just before redirecting investors to provide you their feedback, which is particularly important to the company, Tom, I was just wondering if you had anything else in terms of closing comments. Yeah. Just some closing comments. First thing I wanna do is thank our current investors. We appreciate your investing in the company and your belief in what we do as an organization. Second thing I would like to say is for, you know, potential new investors. I think we have the right model where we're gonna continue to grow ourselves organically as an organization. And, you know, we have the right technology to continue to expand our operations in a profitable manner in this niche iodine market. And then the last thing I think I'll say is that, you know, for our existing shareholders, I wanna invite all of you to our company's AGM, which will be held on the June 13 at 10AM, and information about that is listed on our website. So with that, that's all.

1:03:13 Perfect, Tom Malcolm. Thank you once again for updating investors today. Could I please ask investors not to close the session as you now be redirected to provide your feedback in order that the management team can better understand your views and expectations? This will only take a few moments to complete because I'm sure it'll be greatly valued by the company. On behalf of the management team of IOFINA PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all.