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Aquaculture

ANDFJORD SALMON COMPLETES CONSTRUCTION OF FIRST POOL

ANDFJORD SALMON COMPLETES CONSTRUCTION

Andfjord Salmon completes construction of first pool. Norwegian land-based salmon farmer Andfjord Salmon has completed its first pool and is progressing with its 50 percent production volume expansion plan at its Kvalnes facility. Additional financing has also been secured.

“Progress has been good throughout the second quarter and into the third quarter, and we remain on track with our current plan,” says Martin Rasmussen, CEO of Andfjord Salmon.

Construction is complete on the first pool at Kvalnes, and the pool is about to be filled with water. Only minor installation work, which must be performed after the pool has been filled with water, remains.

During the summer, Andfjord Salmon successfully repaired the damage to the outer connection joint of the water inlet pipeline to the first pool. This week, the second section of the inlet pipeline was successfully installed. Installation of the final part, the water intake filter section, is ongoing and will be completed shortly, enabling full functionality testing of Andfjord Salmon’s flow-through technology.

To secure funding for the extended test period of the first pool and Andfjord Salmon’s patented flow-through technology solution in preparation for smolt release next year, Andfjord Salmon has agreed with some of its largest shareholders the terms of a NOK 50 million unsecured shareholder loan at 3% interest per annum and two years’ maturity. There are no covenants associated with the shareholder loan.

The loan is subject to a number of share options being granted by certain members of the company’s board and management in favour of the lenders.

“We thoroughly appreciate the support from our shareholders, who are very ambitious on our behalf and eager for us to prove the benefits of our flow-through technology. This reflects the favourable loan terms they have offered. We look forward to initiating the testing soon,” says Martin Rasmussen.

In addition to the first pool (Phase 1) and groundwork for the next six pools at Kvalnes (Phase 2), representing a total production volume of 12,600 tonnes HOG, Andfjord Salmon introduced an expansion plan (Phase 3) at Kvalnes in the second quarter 2021.

A land purchase agreement enabling a 50 percent volume expansion has now been signed. At full production, the Phase 3 production volume increase from 12,600 to 19,000 tonnes HOG is equivalent to a potential annual EBIT increase from approximately NOK 350 million to NOK 500 million.

Moreover, by initiating the Kvalnes Phase 3 expansion earlier than originally planned, Andfjord Salmon is able to benefit from lower construction costs and improved economies of scale earlier than planned, and reduce biological risk during Phase 1 and 2 at Kvalnes.

The Phase 3 expansion is subject to necessary financing. The early initiation of Phase 3 at Kvalnes will be funded by debt financing.

“In terms of maximising the long-term revenue potential at Kvalnes, we believe the initiation of Kvalnes Phase 3 is a smart move. We are working on securing financing for the expansion and the dialogue with lenders is positive,” adds Martin Rasmussen.

Andfjord Salmon is currently developing its first land-based salmon farming facility, which means that that the company does not yet generate revenues. The company had an operating loss of NOK 7.0 million in the second quarter of 2021 compared to a loss of NOK 5 million in the same quarter for the previous year.

As of 30 June 2021, Andfjord Salmon held cash or cash equivalents of NOK 61.9 million. This figure does not include a NOK 20 million undrawn credit facility, or NOK 15 million in available grants, or the NOK 50 million shareholder loan that has recently been provided for Andfjord Salmon.

 

 

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