Natural Gas and Iodine producer, Iofina (AIM: IOF) expanded its footprint into the global Iodine market through the acquisition of H&S Chemical for US$7.5 million in cash and 0.736 million shares (aggregate consideration of US$8.5 million). Since listing on AIM, Iofina’s goal has been to build up an integrated iodine company in the United States.
The global iodine market is currently controlled by South American and Japanese companies, leaving the US dependent on imports to meet growing demand from domestic pharmaceutical and industrial consumers.
H&S Chemical manufacturer’s speciality chemicals including, 3-Iodo-2-propynl butyl carbamate (IPBC) which is used in cosmetics, paints and coatings and Methyl Iodide (CH3I) which is a newly approved soil fumigant for high value crops such as strawberries and tomatoes.
Iofina said the acquisition would provide “a strong strategic platform” to produce and sell iodine derivatives through its own and third party iodine production.
On the operational front, Iofina reported that it had reached continuous commercial production of iodine, and completed its first self contained POD/Cluster WET® unit – its own unique iodine extraction technology. The iodine and natural gas producer also stated that it was amending its planned drilling programmes to target areas with higher iodine levels, which in combination with possible third party contracts it is discussing, would lift iodine production volumes and cut unit costs from “2010 and beyond”.
“The iodine derivatives market is an area in which our management team has significant expertise and strength. The acquisition of H&S Chemical will provide Iofina with a strategic position in the US where the large domestic blue chip end users of iodine derivatives currently rely heavily on imports from Chile and Japan,” said Chris Fay, Non-Executive Chairman of Iofina. “Furthermore, with the recent acquisition of significant new acreage our iodine production programme is now focused on areas where iodine is present in higher levels which we believe will accelerate our scale-up of iodine production and our goal of becoming one of the few major iodine suppliers globally.”
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