(IOF.L) Iofina PLC Buy/Sell

On the operations update, Dr. Chris Fay CBE, Non Executive Chairman commented:

"The past few months have been a period of transition for Iofina. We have put in place the structure and framework required for the Company's next stages of development. We are pleased that production at Atlantis is back on track and progressing well and we look forward to keeping shareholders informed of forthcoming production metrics. In addition, Iofina is in contract negotiations with a number of parties for third party brine streams. We look forward to informing shareholders about the detail of these in due course."

Operations Update

Despite the setbacks to the initial timings, as highlighted in the September 2009 Interim report, Iofina is pleased to announce that it has subsequently made excellent progress on all elements of iodine and natural gas extraction and the third party brine stream development plan.

Commercial Scale-Up of Iodine WET® Plant

The critical scaling-up of the central iodine extraction plant at Atlantis was accomplished on budget in less than ninety days with several automation improvements being made. Following the successful initial phase of utilising the infield self-contained, POD/Cluster WET® iodine extraction units, capable of handling up to 6,500 barrels per day ("bbpd") of iodine rich brine, the decision was made to scale up to the larger Atlantis facility in a series of phases. This will allow for the future expansion of the plant as production grows and will also provide the construction blueprint for much larger third party brine stream plants in other locations. The engineering for the plant had to include additional capacity ranging from 30,000-100,000 bbpd, minimising of the plant's footprint, the incorporation of superior filtration systems (key for third party brine that may contain contaminants) and the implementation of flexibility in the stripping process. The iodine extraction plant is now receiving the initial flows of the phase 1 brine line development as outlined in the 30 September 2009 press release. The plant upgrade and design have also incorporated components that will be utilized on larger >30,000 bbpd third party brine streams. The operational template employed allows Iofina to install quickly and cost efficiently a "mini plant" on large third party brine streams, where appropriate. It also offers the ability for third party brine operators to witness and verify both the infield self contained POD/ Cluster WET® units and the mini plant WET® at the Company owned production field, with obvious benefits to the ongoing contract negotiations. It is too early to give precise information regarding iodine yields as the absorbers will need to be filled and stripped multiple times, however initial indications are that yields will be at least in line with earlier expectations. Based on initial measured weight gain expectations the "mini plant" is performing on par with the mobile WET® Pods.

Drilling and Completion of Additional Wells at Atlantis

Further development of the natural gas and brine reserves has taken place at Atlantis to feed the expanded capacity. The specific location for each well was based on geological models developed during the initial drilling phase last year and chosen to maximise both gas and brine production. This was completed by incorporating the well log and historical production data, optimising increased production with artificial lift, minimising surface facilities and allowing future expansion while minimising capital investment. Once the locations were chosen Iofina was able to obtain fixed cost or "turnkey" contracts to drill the wells and to install the major components of the production facility and surface equipment.

All the work on the twelve producing wells and three injection wells has been completed. Initial production rates are encouraging with natural gas production exceeding expectations and brine flow meeting expectations. The Company is experiencing higher casing pressure due to higher than anticipated gas volumes. Iofina will continue to optimise surface facilities to achieve maximum natural gas and brine production, thus maximising dual revenue streams.

The Company is currently drafting its phase 2 field rollout and has received an additional brine injection well permit.

Third Party Brine Streams

A key component of Iofina's strategy consists of providing a full service solution to resource operators generating brine streams associated with oil and natural gas production. A rigorous engineering review of the modular POD/Cluster WET® units has been completed and improvements to the PODs and to the WET® plant have been incorporated in four of the six units that are now available to be deployed to third party brine streams. Each POD is capable of production rates of up to 6,500 bbpd per unit. Iofina has identified a large number of different third party brine stream operators in the U.S. and is in various stages of evaluations and discussions in respect of each of these. These brine stream opportunities range from 2,000 to more than 500,000 bbpd per location and from 50 parts per million ("ppm") (similar to Atlantis) to highly iodine rich sources with more than 1,000 ppm iodine. Each brine stream carries its own unique chemistry and economics which are all significant to the Company. Iofina looks forward to informing investors of further details in due course.

Iodine Chemical Derivatives

H&S Chemical (renamed Iofina Chemical) was acquired in July 2009 for $8.5 million providing Iofina with direct integration into the higher margin $2.5-3 billion per annum iodine chemical derivatives market. Over the past seven months Iofina has implemented a number of initiatives in order to better position the business as part of the wider integrated Company offering, as well as having reacted to a slowing in demand in Q4 2009 which had an impact on margins during that period.

Key changes have included re-pricing of certain products; pitching for new higher margin business from existing and prospective clients; scaling back lower margin products and accounts; launching a new iodine based product; management changes; making capacity improvements to the plant for methyl iodide (a new crop fumigant); and building inventory in anticipation of a recovery in product demand.

Despite the repositioning of the Chemical business and the economic slowdown, it has remained profitable since ownership. Furthermore, the Company is pleased to announce a recent large order of £1.9 million that will be delivered over the coming three months to a new and growing customer. With the addition of this contract, other order wins, and the changes that have now been implemented, there has already been a noticeable indication of recovering profit margins at Iofina Chemical for 2010.

For further information, please contact:
Lance Baller, CEO Nominated Adviser:
Iofina plc James Harris/Angela Peace
Tel: +44(0)20 3006 3135 Strand Hanson Limited
Tel: +44(0)20 7409 3494

Broker: Media Contact:
Rory Scott Klara Kaczmarek
Mirabaud Securities Limited Pelham Bell Pottinger
Tel: +44(0)20 7878 3360 Tel: +44 (0)20 7337 1524

About Iofina

Iofina is involved in the exploration and production of both iodine and natural gas with complete vertical integration into the specialty chemical iodine derivatives business. It also provides third party brine stream operators with a turnkey solution to extract iodine. The presence of both iodine and natural gas has been discovered on acreages which the Company holds through its wholly owned subsidiary Iofina Natural Gas, Inc. The presence of both iodine and natural gas allows the Group to generate dual revenue streams over a single cost structure.

Iofina is traded on the London Stock Exchange's AIM Market under the ticker: IOF

www.Iofina.com

Wellhead Extraction Technology® and WET® are registered trademarks of Iofina Natural Gas, Inc.

This information is provided by RNS The company news service from the London Stock Exchange

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