Only minor installation work, which must be performed after the pool has been filled with water, remains.
Andfjord is using a patented flow-through system for its farm at Kvalnes on the island of Andøya. Its salmon pools, excavated from rock, are below sea level to reduce the power required for water pumps, and will have full sea water exchange 15-17 times a day.
During the summer, Andfjord successfully repaired the damage to the outer connection joint of the water inlet pipeline to the first pool. This week, the second section of the inlet pipeline was successfully installed. Installation of the final part, the water intake filter section, is ongoing and will be completed shortly, enabling full functionality testing of the flow-through technology, the company said.
“Progress has been good throughout the second quarter and into the third quarter, and we remain on track with our current plan,” says chief executive Martin Rasmussen.
Andfjord said it had secured a NOK 50 million (£4.2m) loan from some of its largest shareholders to fund an extended test period of its first pool and flow-through technology in preparation for smolt stocking next year.
The loan is subject to share options being granted by certain members of the company’s board and management in favour of the lenders.
“We thoroughly appreciate the support from our shareholders, who are very ambitious on our behalf and eager for us to prove the benefits of our flow-through technology. This reflects the favourable loan terms they have offered. We look forward to initiating the testing soon,” said Rasmussen.
In addition to the first pool (Phase 1) and groundwork for the next six pools at Kvalnes (Phase 2), representing a total production volume of 12,600 tonnes (head on gutted), Andfjord introduced an expansion plan (Phase 3) at Kvalnes in Q2 2021.
A land purchase agreement enabling a 50% volume expansion has now been signed. At full production, the Phase 3 volume increase from 12,600 to 19,000 tonnes HOG is equivalent to a potential annual EBIT increase from approximately NOK 350m to NOK 500m.
The company said that by initiating the Kvalnes Phase 3 expansion earlier than originally planned, it is able to benefit from lower construction costs and improved economies of scale earlier than planned and reduce biological risk during Phase 1 and 2 at Kvalnes.
The Phase 3 expansion is subject to necessary financing. The early initiation of Phase 3 at Kvalnes will be funded by debt financing.
‘A smart move’
“In terms of maximising the long-term revenue potential at Kvalnes, we believe the initiation of Kvalnes Phase 3 is a smart move. We are working on securing financing for the expansion and the dialogue with lenders is positive,” said Rasmussen.
Andfjord intends to eventually produce 70,000 tonnes of salmon annually by building two more on-land farms on Andøya.
As it is not yet generating revenues, had an operating loss of NOK 7m in Q2 2021, compared to a loss of NOK 5m in the same quarter last year.
As of 30 June 2021, Andfjord Salmon held cash or cash equivalents of NOK 61.9m. This figure does not include a NOK 20m undrawn credit facility, or NOK 15m in available grants, or the NOK 50m shareholder loan.