Andfjord Salmon secures major investment, progresses with Kvalnes expansion

Andfjord Salmon Group has announced significant advancements in the first quarter of 2024 as it continues work to ramp up production capacity at its land-based flow-through facility at Kvalnes on Andøya island in northern Norway.

The company recently successfully raised NOK 350 million (USD 33.3 million / EUR 30.8 million) in equity through a private placement of new shares, attracting strategic investors, including High Liner Foods Incorporated, a leading Canadian seafood firm, which acquired a 4.5% stake in the business.

Andfjord is in the process of expanding its land-based facility, and reports that the build-out work at Kvalnes progressing well. The first phase involves the completion of four new pools, aiming for a production capacity of 8,000 tonnes head-on-gutted (HOG) by 2025, with a long-term goal of reaching 40,000 tonnes HOG by 2030.

The excavation of 12 additional pool pits was completed ahead of schedule, and a facility for producing concrete elements for the pools has been set up, utilizing excavated material to minimize costs and environmental impact. Development of inlet and outlet waterways and the harbour area is also on track, the company said.

In its report, Andfjord Salmon emphasized its "science-based approach" to land-based fish farming, quoting an independent report from Norwegian research institute Nofima which documented strong biological conditions and comprehensive welfare indicators for the salmon in the first production cycle.

“The fish farming industry is under pressure to improve biological conditions, fish health and welfare. Although we are still only a small player in a large global industry, this report shows that our land-based flow-through system is capable of enabling fish-friendly salmon farming,” said Andfjord Salmon CEO, Martin Rasmussen.

In its quarterly report, Andfjord Salmon also highlighted the introduction of its "post-smolt" strategy to utilize surplus pool capacity. After raising smolt to approximately 1 kilogram, these fish will be sold to ocean-based farmers in the region.

"It is a smart way of enhancing production capacity and income potential without adding additional infrastructure costs," the company said, noting the strategy is projected to increase biomass turnover by 10%, potentially boosting EBIT by 15-25% and improving cash flow through faster revenue generation.

As another element of its post-smolt strategy, Andfjord Salmon is to supply post-smolt for nearby sea-based farming operations, by partnering with Eidsfjord Sjøfarm/Holmøy Havbruk. The collaboration aims to provide biological and environmental benefits by releasing larger, more robust fish into ocean net pens, the company said.

Andfjord Salmon reported an operating loss of NOK 17 million (USD 1.62 million / EUR 1.49 million) in Q1 2024, compared to NOK 13.9 million in the same period last year, which the company says is to be expected given its current focus on development rather than production.

However, this was far outweighed by the company's recent NOK 350 million equity raise, with increased investor interest providing Andfjord Salmon with the necessary backing for its ongoing Kvalnes build-out.

Major existing shareholders, including Jerónimo Martins Agro-Alimentar S.A and Eidsfjord Sjøfarm, participated in the private placement.

The fundraise also brought in new shareholder, Canadian frozen seafood company High Liner Foods Inc., which invested USD 10 million (EUR 9.2 million / NOK 105 million), accounting for a 4.5% stake in the business.

“All in all, we are satisfied with the progress we are making, and we are pleased to see that reputable industrial investors recognise this by investing in Andfjord Salmon,” Rasmussen said.