Andfjord Salmon plans to increase production volume by around 50 percent at its land-based farm in Kvalnes, located on the Norwegian island of Andøya.
The company plans to ramp up production from 12,600 metric tons (MT) to 19,000 MT of head-on-gutted (HOG) fish, equating to an annual earnings before interest and taxesincrease of NOK 150 million (USD 18 million, EUR 15 million) to NOK 500 million (USD 60 million, EUR 50 million), Andfjord Salmon CEO Martin Rasmussen explained to shareholders during a presentation of the firm’s 2021 first-quarter results.
To facilitate the expansion in biomass, an additional 63,000 square meters of land is being acquired adjacent to the existing site, Rasmussen said. Phase one of the project is almost complete, he added – just finishing touches are needed on the first pool, and a NOK 30 million (USD 3.6 million, EUR 3 million) repair is required for the outer joints of the pool’s water inlet pipeline.
Excavation work for the project's second phase has started, Rasmussen said.
“We are constantly looking at ways to improve the Kvalnes build-out, both to reduce project risk and to increase the long-term profitability of Andfjord Salmon. Initiating build-out of Kvalnes phase three is one such measure,” Rasmussen said.
The company has plans to develop a further two sites on Andøya, with a purchase option for land at Breivik, and land already acquired at Fiskenes. Each site has a production potential of up to 25,200 MT HOG, and both are awaiting approval as fish-farming sites.
Andfjord Salmon’s new plans are subject to approval by the board of directors and the ability to raise debt financing. Implications of the plans include a shift in date for release of smolts into the first pool, but a reduction in overall build-out costs; a reduction in the risk of fish suffering stress from noise and vibration during construction works; and a significant strengthening of mid- and long-term revenue potential, the company said.
“It is the management’s view that clearing the path to realize a potential 50 percent growth in production volume at Kvalnes, at a lower build-out cost than we will achieve at a later stage, is an attractive proposition that more than outweighs the consequence of moving first smolt release to 2022,” Rasmussen said.
The company remains in a pre-revenue position, and reported an operating loss of NOK 7.3 million (USD 871,000, EUR 731,000) in the first quarter of 2021, compared to a loss of NOK 3.3 million (USD 394,000, EUR 331,000) in the same quarter last year.
As of 31 March, 2021, Andfjord Salmon held cash or cash equivalents of NOK 88.8 million (USD 10.9 million, EUR 9.1 million). This figure does not include a NOK 35 million (USD 4.2 million, EUR 3.5 million) undrawn credit facility and NOK 15 million (USD 1.8 million, EUR 1.5 million) in available grants.
Photo courtesy of Andfjord Salmon
