Indre Harøy smolt release - Photo courtesy from Salmon Evolution

Salmon Evolution – Results for the first quarter 2022

NORWAY
Friday, May 27, 2022, 06:50 (GMT + 9)

First quarter highlights

• First fish tanks and related technical installations at Indre Harøy completed and put into operation
• First smolt batch released at Indre Harøy late March as per original timeline – next smolt release planned in Q2 2022
• Batch 1 performing in line with expectations – stable farm conditions with strong initial feed numbers and low mortality – average weight of ~725 grams as of 21 May
• Phase 1 construction continuing according to plan – phase 1 capex estimate unchanged
• Initiated phase 2 preparations at Indre Harøy – signed Heads of Terms with Artec Aqua for phase 2 build-out
• Available liquidity of NOK 1,056 million per 31 March 2022 including committed undrawn credit facilities and adjusted for April 2022 private placement

Subsequent events

• Completed NOK 300 million private placement to partly fund planned Indre Harøy phase 2 build out and smolt facility expansion

All 12 fish tanks in phase 1 are now assembled with most of the structures and buildings completed. Following a period of testing and commissioning started in December last year with the first part of the facility commenced operations late March.

Indre Harøy phase 2 illustration - Photo courtesy from Salmon Evolution

Capex during the first quarter amounted to 244 million. In addition, NOK 13.5m of internal G&A were capitalized. Q1 2022 saw good progress at the construction site. Together with timing effects as to delivery dates of high value equipment, this contributed to the high Q1 capex.

Following an extensive commissioning and testing period commenced already in December, Salmon Evolution took over the first part of the facility on 26 March. The handover included inter alia the water intake station and the first two fish tanks together with connecting infrastructure and technical installations. Later the same day, Salmon Evolution successfully completed its first smolt release consisting of about 100,000 smolt with an average weight of around 300 grams. Following the positive confirmation of the fish transfer process and a customary short adaption period for the fish, initial feeding commenced.

First smolt release at Indre Haroy - Photo courtesy from Salmon Evolution

Along with the Company’s technicians being accustomed with the facility, feeding has been gradually increased. Throughout this process feed waste has been carefully monitored to avoid overfeeding. The Company is very pleased to see that the fish is responding very well to feeding and on 30 April a significant milestone was reached when the daily feeding volume for the first time exceeded 1 ton, which represented more than 2% of the standing biomass. The positive trend has continued in May with average daily feeding exceeding 2% of the biomass.

Commenting on the development, CEO Håkon André Berg, said:

"Since we started construction back in May 2020, the first smolt release has been the moment that we all have been waiting for. I am extremely proud of our organization and the fact that we have been able to adhere to our ambitious timeline, even with the challenges faced us during the pandemic.

At the same time, this is just the beginning. As we now move forward, our number one priority is the biology in our farm. Good biology will improve fish quality and translate into strong growth, which finally will be reflected in the financial performance. With our organization now totaling almost 50 highly skilled employees, I am more confident than ever in our mission - extending the ocean potential.”

In addition, on 7 February 2022 Salmon Evolution announced that the company had entered into a Heads of Terms with Artec Aqua for the phase 2 build-out at Indre Harøy. Phase 2 is expected to in principle be identical to phase 1 and add a further 7,900 tons HOG of annual production, bringing the total planned production volume to 15,800 tons HOG per annum. The final design and construction agreement will include financing reservations providing Salmon Evolution with the necessary flexibility to align the phase 2 build out with the Company’s overall financing plan.

Photo courtesy from Salmon Evolution

Further, on 5 April 2022 Salmon Evolution completed a private placement raising gross proceeds of NOK 300 million at a subscription price of NOK 9.00 per share. The private placement attracted strong interest from Norwegian, Nordic and international high-quality investors and was significantly oversubscribed. The net proceeds from the private placement will be used to (i) partly fund the second phase of the Indre Harøy facility, (ii) smolt facility expansion and (iii) for general corporate purposes.

Source: Salmon Evolution

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