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Salmon Evolution buys smolt farm to supply land-based venture

An illustration of the Salmon Evolution plant at Indre Harøy, currently under construction. Image: Salmon Evolution.
An illustration of the Salmon Evolution plant at Indre Harøy, currently under construction. Image: Salmon Evolution.

Salmon Evolution, which is building a large on-land salmon farm in Norway, has bought 100% of the shares in family owned smolt producer Kraft Laks for NOK 76.5 million (£6.25m).

With an annual production of around 1.8 million smolt and capacity for up to five million, the smolt plant is expected to meet Salmon Evolution's smolt needs at its development on the island of Indre Harøy in Møre og Romsdal.

The land-based salmon farm will produce 36,600 tonnes of fish (31,500 tonnes head on gutted) when the plant is completed. Phase 1 will give a production of 9,150 tonnes.

Globally, Salmon Evolution has a target of 70,000 tonnes, including a planned plant in South Korea which will have an annual capacity of 20,000 tonnes (16,800 tonnes HOG).

Ingjarl Skarvøy, COO of Salmon Evolution
Ingjarl Skarvøy, COO of Salmon Evolution

Kraft Laks, based in Dalsfjorden in Volda municipality, has been producing smolt
since 1995, with the majority of its smolt sold on a long-term contract to one of the major salmon farmers in recent years.

Revenues

Over the last three financial years, the company has had an annual average EBITDA of approximately NOK 10 million and annual average revenues of NOK 28.5 million.

Salmon Evolution said it has identified significant expansion opportunities for the facility which, if realised, is expected to also cover Salmon Evolution's smolt needs for at least phase 2 at Indre Harøy based on current plans.

Kraft Laks has an excellent freshwater supply from three inlet stations, served by two rivers and the surrounding mountains, as well as from the local power station.

The freshwater access has enabled the smolt farmer to deploy production technology similar to Salmon Evolution's hybrid flow-through system, which reuses water, CO2 stripping and oxygenation.

Alternatives

Ingjarl Skarvøy, COO of Salmon Evolution, said: ‘The acquisition of Kraft Laks is the result of a thorough process where Salmon Evolution has evaluated a number of alternatives with respect to sourcing of smolt.

‘The company is confident that acquiring an existing operation with documented track record has a significant risk mitigating effect. It also gives us flexibility with regards to our production plan at Indre Harøy and finally it does so in a cost and capex effective manner.’

Knut Endre Heltne, majority owner and general manager of Kraft Laks, said the company had found in Salmon Evolution ‘a partner that shares our philosophy when it comes to salmon farming’.

‘It is a great privilege to join the Salmon Evolution team as continued general manager of Kraft Laks and for us as a family we also look forward to take part in Salmon Evolution's exciting journey as shareholders.’

Currently, Kraft Laks is fully stocked with smolt to cover its existing customer contract. The existing inventory is also aligned to cover Salmon Evolution's expected smolt needs from and including the first smolt release at Indre Harøy planned in March 2022.