3 June 2023
“Our plan has always been to utilise the first pool to prove the value of our flow-through technology and the excellent biological performance it enables, before financing and progressing with the next build-out stage. We are very excited to deliver on this strategy,” says Martin Rasmussen, CEO of Andfjord Salmon.
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The backdrop to today’s capital markets update from Andfjord Salmon is a successful first production cycle with good fish welfare and health, strong growth, low energy consumption of 1 kwh/kg salmon produced, industry-leading survival rate of 97.8% and accumulated feed conversion ratio of 0.96. The first harvest of up to approximately 700 tonnes HOG will be conducted at the turn of June/July 2023.
40,000 TONNES AT KVALNES
Andfjord Salmon is today announcing its plans for a production volume at full capacity of 40,000 tonnes (HOG) at Kvalnes, Andøya, Norway. The new production capacity will gradually be added between 2025 and 2030, with 8,000 tonnes (HOG) of production capacity expected to be added as early as 2025.
For the build-out to 40,000 tonnes at Kvalnes, Andfjord Salmon is targeting a blended capex of NOK 114 per kg (including substantial buffers) and operating expenditures of NOK 40 per kilo salmon produced (including depreciation).
The Company’s two other locations, Breivik and Fiskenes, represent additional potential production capacity estimated to 50,000 tonnes combined. Considerable preparatory work has been conducted to this end.
COMMITMENT FOR BANK FINANCING SECURED
Andfjord Salmon has secured commitment for a NOK 700 million bank loan from SpareBank 1 Nord-Norge and bank alliance partners, including Eksfin, for the construction of the next expansion step at Kvalnes. The margin on the bank loan is set to 3.9% + NIBOR. The bank loan includes a 24-month amortization holiday following the estimated start of production. Further, Andfjord Salmon’s current outstanding NOK ~75 million bank loan is to be refinanced and replaced.
The loan agreement will include an allowance for a financial lease facility to fund equipment of up to NOK 125 million. Financing of working capital is also separately included in the debt package and is intended to be sized and timed in accordance with the next production cycle.
“The bank financing represents a major step in the further expansion of Andfjord Salmon and is based on excellent biological and operational results from our first pool. We are delighted to have secured such competitive financing,” says Martin Rasmussen.
In this upcoming construction stage, the Company is planning to establish major infrastructure such as waterways and port area to support 40,000 tonnes of production at Kvalnes. Together with highly reputable construction partners Hæhre Kruse-Smith and Cflow, a budget of NOK 1,300 million plus a buffer of NOK 350 million has been estimated for the next two years.
Andfjord Salmon is currently finalizing key construction contracts and is maintaining flexibility in terms of timing and further refinement of the capital structure. Having followed Andfjord Salmon over time, key shareholders Jeronimo Martins (multinational food distribution major) and Eidsfjord Sjøfarm (conventional salmon farmer), both represented on the Company's board, have signaled that they intend to significantly increase ownership and are expected to cover the majority of a potential equity component.
All future expansions (from 8,000 tonnes and upwards) are expected to be financed by a combination of debt and cash flow.
CAPITAL MARKET’S UPDATE
Andfjord Salmon will today host its capital market’s update at Felix Conference Center, Bryggetorget 3, 0250 Oslo, Norway.
The session from 08:00 to 09:00 will be presented in English and can be viewed from this URL:
See the stock exchange announcement dated 12 June 2023 for the complete schedule.
The presentation material is enclosed to this announcement. e