Salmon Evolution RAS projects ‘on track’

Land-based fish farmer Salmon Evolution is happy with the progress being made on its two major sites in Norway and South Korea, although the company continues to burn cash.

Salmon Evolution is building a RAS (recirculating aquaculture system) at Indre Harøy, Norway and – via K Smart Farming, a joint venture with Korea’s Dongwon Industries – another in South Korea.

On 16 August, Salmon Evolution also announced the acquisition of Kraft Laks AS, a Norwegian smolt producer located in Dalsfjorden, Volda. Kraft Laks has an annual production capacity of around 1.8 million smolt but holds licences to produce up to five million smolt per year subject to certain conditions.

The acquisition ensures Salmon Evolution’s supply of smolt for Phase 1 at Indre Harøy, and potentially for Phase 2.

Salmon Evolution’s financial report for Q2 of this year shows that book losses mounted to negative EBITDA of NOK 13.57bn (£1.1m) and an accounting loss of NOK 9.99bn (£811,013).

The company recorded capital expenditures during the quarter of NOK 172m (£13.96m), of which NOK 168m (£13.6m) were investments related to the turnkey project with Artec Aqua at Indre Harøy. As per 30 June 2021, accumulated capex from project initiation in 2019 amounts to NOK 506m (£41m).

Salmon Evolution said that since the groundwork at Indre Harøy, started in May 2020, Phase 1 has developed according to plan, on time and on budget. Construction work during first half 2021 has mainly been on the production facilities, where the company has made solid progress on construction of buildings and structures. Seven out of twelve fish tanks are assembled, where the remaining fish tanks are expected to be completed in Q4.

The first process equipment and pipes have also arrived at Indre Harøy and are expected to be installed during the next quarters. The plan for first smolt release in March 2022 remains on track, the company said.

During the second quarter, Salmon Evolution Secured and formalised a NOK 625m (£50.7m) debt financing package ensuring a fully funded platform for Indre Harøy phase 1 and equity commitment for K Smart. The company has since moved its share listing to Oslo’s main stock exchange.

CEO Håkon André Berg, said: “Activity on Indre Harøy was high during the quarter, and we are happy to see that the project is developing according to plan and that we remain on track for production start in the first quarter of 2022. The joint venture with Dongwon Industries also made real progress this quarter with closing of the first equity tranche, which allows the project to commence with feasibility study for both the smolt and grow out facility.

“Further, we are very grateful for the support shown by our banks and believe the debt financing package is unique in the new land-based salmon farming industry.”