Despite tough environment, Atlantic Sapphire says it has funds to complete Phase 2 facility

Atlantic Sapphire has the funds to deliver both Phase 1 and Phase 2 of its US operations despite the current environment of high Inflation and high electricity prices in Europe having a “big impact” on the capital market for RAS projects globally.

“There’s been a problem, so to speak, to be out and engage with investors, but I would not say that there’s a lack of interest in any way,” CFO and managing director Karl Øystein Øyehaug said at the RASTECH Virtual Summit 2022 on Thursday. He clarified this with SalmonBusiness later on, saying what he meant was “there’s been no problem to engage with investors, there’s no lack of interest.”

He said the $125 million that the company raised in June speaks for the “significant interest” in Atlantic Sapphire.

“The issues that we’re solving with our way of producing salmon is something that resonates well with investors. But of course, as investors get more and more educated, they will ask better and better questions about how we’re handling risk, and also the economics of what we do.”

New milestone coming up

He said the large commissioning challenges that Atlantic Sapphire faced in the past two years at its Miami, Florida facility have largely been addressed and have paved the way for the phase one, 10,000-ton facility to operate at full capacity for the first time “within weeks.”

The land-based salmon operator expects to harvest between 800,000 to one million fish in the second half of the year, most of that in Q4.

“2022 has so far been a much better year for us after huge construction and commissioning issues in 2020 and 2021. 2022 has been a year of stability that has allowed us to finally fine-tune the US operation. We’re not there yet, but we’re taking large leaps towards where we want to be throughout 2022,” Øyehaug said.

Phase 2 update
The company expects the first fish to be introduced into Phase 2 in 2024.

“This will be an additional 36 tanks that will add an additional 15,000 tons of capacity once that construction is finalized. This will bring total annual harvest volume capacity to approximately 25,000 tons,” he said. The company’s goal is to produce 220,000 tons of Atlantic salmon per year at the US facility by 2031.

Given the current inflationary environment and supply chain isssues, Øyehaug said the company is sacrificing speed of construction of Phase 2 and is focusing instead on optimizing the project quality and cost.

“If we were to assume we have the current fixed cost base combined with full steady state volumes (9,500t HOG per year), that would imply roughly $9/kg,” Øyehaug said.

He said $9/kg is “enough to give us a profit,” but the long-term vision is to bring it down to the $5/kg cost of production of its ocean-based peers.

The company’s focus for the rest of 2022 is to optimize operations and minimize costs. Among these are to reduce power consumption which is currently at 8 kWh/kg of salmon produced.

The stock price of the Oslo Stock Exchange-listed Atlantic Sapphire (green line) has gone down 71.8 percent over the past six months.

Dismal stock price
The stock price of the Oslo Stock Exchange-listed Atlantic Sapphire has gone down by almost 72 percent over the past six months.

“We never comment on the share price and as you may know the global stock markets in general are tumbling for growth stocks,” Johan Andreassen, co-founder of Atlantic Sapphire told SalmonBusiness in September.

The share price closed at NOK12.26 on Wednesday.


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