Atlantic Sapphire’s US project to be completed in two years

Atlantic Sapphire Phase 1 & 2 aerial view in August 2022. Photo: Atlantic Sapphire.
Atlantic Sapphire Phase 1 & 2 aerial view in August 2022. Photo: Atlantic Sapphire.

After suffering some delays and setbacks such as concrete delivery shortages, according to the H1 2022 results report presented last Friday, the current estimate for the completion of the Atlantic Sapphire project in the United States is H1 2024, in two years. The estimated capital expenditure to complete Phase 2 is USD 275-300 million (€275.53-300.58 million). The group, which has reported a net loss of USD 37 million (€37.08 million), warns of the dangers of inflation but is confident that demand from the US market remains strong.

Quality and cost optimization over building speed

After completing financing of the US Phase 2 expansion through a USD 125 million (€125.35 million) private placement and USD 98 million (€98.26 million) in additional term debt, the company claims that "current estimate is completion H1 2024", although they also point out that "quality and cost optimization prioritized over building speed". Estimated capital expenditures to complete Phase 2 of Atlantic Sapphire's Bluehouse in Florida are USD 275-300 million (€275.53-300.58 million).

Nevertheless, inflation remains a concern. The company counts on the "inflationary pressure on the Phase 2 capex budget", in addition to "cost inflation across most key production inputs". However, Atlantic Sapphire is optimistic and assures that "multiple opportunities" have been identified to compensate for it. "Value engineering is ongoing", they say, and add that they are "working with contractors to optimize cost and quality for outstanding Phase 2 capex". Moreover, they highlight that the US salmon market continues to look strong despite inflationary pressure on consumer spending.  And they conclude: "Additional programs and customers expected as harvest volumes increase, price achievement expected to increase with harvest of New Batches".

Decrease in losses and total expenses

In terms of results, according to the Atlantic Sapphire's H1 2002 report, "group net loss for the six months ended 30 June 2022 was USD 14.5 million (€14.52 million), which represents a decrease in net loss of USD 37.0 million (€37.08 million) compared to the group's net loss of USD 51.5m for the six months ended 30 June 2021". This decrease is attributable to the USD 25.3 million (€25.31 million) insurance settlement from the September 15, 2021, Denmark Bluehouse fire, as well as experiencing a decrease in the cost of materials attributed to extraordinary mortality retirements in the six months ended June 30, 2022, compared to the same period in the prior year. "Overall, the Group continued to ramp-up operations in the US with respect to revenue, standing biomass, harvest volume, and costs", the report asserts. In addition, the report also highlights that, despite a similar harvest volume, total expenses in the first half of 2022, excluding the insurance gain in Denmark, decreased by USD 13.3 million (€13.31 million) compared to the previous year.

As of August 25, 2022, the standing biomass was 3,500 tons, which is 83% of the Phase 1 forecast. Stable conditions allowed for the ramp-up of Phase 1 operations of the Bluehouse in the USA, resulting in a significant reduction in cost per kg produced compared to 2021. In addition, the company has completed a new filleting facility that "sets the foundation for cost efficient processing, higher yields and better quality control". At the end of the reporting period, H1 2022, investment in the Atlantic Sapphire development in Florida, US, reached USD 70 million (€70.1 million).

About Atlantic Sapphire

Atlantic Sapphire is pioneering Bluehouse® (land-raised) salmon farming, locally. The company has been operating its innovation center in Denmark since 2011 with a strong focus on R&D and innovation.  In the US, it has identified and obtained the requisite permits to construct its Bluehouse® in Homestead, Florida, south of Miami. The Company has completed Phase 1 construction, which provides the capacity to harvest approximately 10,000 tons of salmon annually and completed its first commercial harvest in the US in September 2020. Currently, it is constructing its Phase 2 expansion, which will bring total annual production capacity to 25,000 tons and has a targeted harvest volume in 2031 of 220,000 tons.

*Cover photo: Atlantic Sapphire Phase 1 & 2 aerial view in August 2022, courtesy of Atlantic Sapphire.

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