Turning Waste Water Into Growth

The best AIM growth stories are often hiding in places few investors think to look. In Iofina’s case, that place happens to be the waste water produced by oil and gas wells across the United States.

The Iodine Producer With A Difference

Iofina is one of the largest iodine producers in North America, but it operates very differently from traditional mining businesses.

Rather than mining iodine from ore deposits, the company extracts it from brine water produced during oil and gas operations. Using its proprietary extraction technology, Iofina recovers iodine from what would otherwise be a waste stream before processing it into crystalline iodine and a range of speciality chemical products.

The end markets are broader than many investors realise. Iodine is used in pharmaceuticals, X-ray contrast agents, disinfectants, LCD displays, animal health products and industrial chemicals. Demand continues to be driven by healthcare applications, while newer opportunities are emerging in areas such as advanced materials, solar technology and refrigerants.

What makes the model particularly attractive is its scalability. Rather than spending hundreds of millions developing large mining projects, Iofina can expand production through relatively low-cost modular facilities connected to existing brine supply sources.

A Clear Pathway To Higher Production

The central investment case revolves around production growth.

Over the past three years, management has successfully commissioned three new iodine production plants. IO#9 entered production during 2023, IO#10 followed in 2024 and IO#11 became operational in 2025.

The impact is already visible in the numbers. Iodine production increased 17% last year to a record 743 metric tonnes, while total iodine sales volumes rose 24%.

Importantly, the growth story is far from over.

The company’s next facility is currently under construction in the Permian Basin, one of the most active oil-producing regions in North America. Unlike previous projects, this facility has been designed to process significantly larger volumes of brine and is expected to become a major contributor to future production growth.

Management has also begun outlining a more ambitious long-term vision. Once the Permian facility becomes operational later this year, annualised iodine production is expected to approach 1,000 tonnes.

Beyond that, management believes the pathway towards 2,000 tonnes of annual production is becoming increasingly achievable.

For a business valued at less than £100 million, that represents a substantial opportunity.

Record Results Across The Board

The latest full-year results showed exactly why investors have started paying attention.

Revenue increased 22% to a record $66.5 million, driven by higher production volumes and continued demand across iodine markets. Gross profit rose 36% to $18.0 million, while adjusted EBITDA increased 56% to $11.8 million.

Profit before tax increased 75% to $8.4 million, excluding government subsidy receipts, while post-tax earnings jumped from $2.9 million to $7.9 million.

Just as importantly, the balance sheet continues to strengthen.

Despite investing $8.4 million into expansion projects during the year, net cash increased from $2.9 million to $5.2 million. Cash balances finished the year at $11.7 million, leaving the company well positioned to continue funding future growth.

Operational leverage is also beginning to emerge. Production costs remained broadly stable despite significantly higher output, allowing a large proportion of additional revenue to flow through into profits.

That dynamic becomes increasingly powerful as production volumes continue to rise.

Analysts currently expect earnings growth to continue over the next two years, with earnings per share forecast to increase from 4.1 cents to 6.7 cents by 2027.

More Growth Already On The Way

Investors have not had to wait long for further evidence that expansion plans remain on track.

Earlier this month, Iofina announced a new brine supply agreement for its recently commissioned IO#11 facility in Oklahoma. The agreement will provide an additional source of brine water to the plant and is expected to increase annual iodine production by between 45 and 65 metric tonnes once fully operational.

What makes the announcement particularly attractive is that the expansion requires only around $1.5 million of investment while utilising existing infrastructure and processing capacity.

Management estimates the project could increase production from IO#11 by approximately 50%.

Rather than building another facility from scratch, the company is simply extracting more value from assets that are already in place. That suggests attractive returns on invested capital while continuing to grow output.

The project is expected to be completed during the third quarter of this year.

The Market Is Beginning To Recognise The Opportunity

The chart tells a story that increasingly mirrors the improving fundamentals.

The latest pullback appears consistent with normal profit taking rather than any deterioration in the underlying trend.

At around 13 times forward earnings, the valuation still looks reasonable given the scale of the growth opportunity ahead.

With a proven expansion model, record production, a strengthening balance sheet and a clear pathway towards substantially higher output over the coming years, Iofina appears well positioned to continue creating value for shareholders.

Five Key Takeaways

1. Unique Model: Iofina extracts iodine from waste water generated by oil and gas operations, creating a scalable and differentiated production model.

2. Production Growth: Iodine production increased 17% to a record 743 tonnes in 2025, with a pathway towards 1,000 tonnes and eventually 2,000 tonnes.

3. Record Results: Revenue rose 22% to $66.5m while adjusted EBITDA increased 56% to $11.8m and profit before tax climbed 75%.

4. Strong Balance Sheet: Net cash improved to $5.2m despite investing heavily in new production facilities and future growth.

5. Momentum Building: The shares remain in a strong uptrend as investors begin to recognise the company’s operational progress and expansion potential.