major barrunmundi exp in vietnam

ASX/MEDIA RELEASE May 15, 2007 Major Barramundi Expansion in Vietnam to Accelerate Australis’ Revenue Growth Sales focus on the USA and Australia Australis Aquaculture (ASX Code: AAQ) is pleased to announce that it has entered into a Memorandum of Understanding (MOU) with a Vietnamese aquaculture group to produce barramundi in Central Vietnam. The company believes that its Vietnamese operations have the potential to contribute as much as a six-fold increase in revenues from fish sales within three years and up to a twenty-fold increase within five years. Australis will be establishing a wholly-owned subsidiary to undertake its Vietnamese activities and will be working cooperatively with its local partner to develop vertically integrated production, sourcing and processing operations. Under the terms of the agreement, Australis’ Vietnamese partner will provide production support on the proposed site, which is believed to be of sufficient scale to produce up to 10,000 tonnes per annum. Australis spent more than a year evaluating a wide range of options to accelerate supply creation in response to growing North American demand. Selection criteria included product quality, the ability to incorporate world-class sustainable aquaculture practices, opportunities to leverage Australis’ proprietary aquaculture technology and know-how, and the speed with which additional product could be available for market. The Vietnamese option was also distinguished by its very competitive capital and operating costs. “After more than a year of detailed analysis, we are confident that we have identified a very special situation within a pristine marine environment that meets all of our objectives,” said Australis Managing Director, Josh Goldman. According to Mr. Goldman, “Traditional methods of producing barramundi in Southeast Asia suffer from poor and often variable survival rates and sub-optimum feed conversion efficiencies. Australis believes that use of its proprietary technology and know-how in Vietnam can substantially improve the cost, reliability and quality of production outcomes while rapidly increasing supply in a manner that is consistent with the Company’s commitment to sustainable production,“ he said. AAQ’s sourcing of barramundi from Vietnam is expected to commence in late 2007. To support the project, the Company has assembled a team of highly qualified expatriates who have many years of experience in both commercial aquaculture and the operating conditions in Vietnam. The project’s General Manager will be Mr. Dan Fisk, an Australian who was formerly Regional Manager for Tassal’s salmon farming operations in Tasmania. Mr. Howard Feilding, an Australian national with more than fifteen years of Australis Aquaculture Limited
experience in Vietnam who formerly served as General Manager, Vietnam for Portman Mining, Chief Representative, Vietnam for Anzoil and as Managing Director of two 100%-foreign owned, Vietnamese-incorporated aquaculture companies, will provide senior level consulting support to the project. Gil Watts, a US national with many years of seafood experience in Vietnam will assist the company in sourcing and production. Outlook for Vietnam Operations The Company expects its Vietnam operation to produce at an annualized rate of 3,500 tpa within two years of start-up and is targeting achievement of 10,000 tpa of output within five to seven years. According to Mr. Goldman, “At this level, Australis’ Vietnamese operation will result in a tenfold increase in the Company’s current production capacity.” “This target represents approximately 33% of the total reported 2004 world production of barramundi and is more than three times the reported commercial production in Australia during the same period. Completion of the Agreement is subject to final documentation which is expected to be signed in June 2007,” he said. The majority of the operation’s output will be directed toward serving the Company’s North American and European markets. Given the proximity to Australia, Australis also intends to use a portion of its output to supply fresh barramundi fillets into the lucrative Australian market. The Australian market has become heavily reliant on imported barramundi, much of which is freshwater-reared product from other locations in Asia. With higher prices being paid for high-quality saltwater barramundi, Australis anticipates that a significant ready market exists in Australia for its Vietnam produced fish, allowing the Company to leverage its successful US “The Better Fish” marketing program in Australia. About Australis Australis Aquaculture Limited (ASX: AAQ) is North America’s first and only significant producer of Australian barramundi. It owns and operates one of the world’s largest indoor aquaculture facilities, located in Turners Falls, Massachusetts. The Company established barramundi as a growing seafood trend in the US, and is successfully marketing its barramundi as ‘The Better Fish’: Better Tasting, Better For You, Better for our Environment. Australis’ expertise in controlled-environment aquaculture has earned it the reputation as ‘the gold standard’ in sustainable aquaculture. The Company’s low-cost production system, patented technology and experienced management are propelling Australis to expand more quickly, and at significantly lower cost, than potential competitors. About Aquaculture in Vietnam In 2004, Vietnamese aquaculture output exceeded 1.1 million metric tonnes, or 37% of the country’s total fish production. The sector has grown rapidly, generating exports valued at A$3 billion in 2004. A reported 902,000 hectares is used for aquaculture, of which 63.7% is for marine and brackish water culture, principally shrimp. Catfish (basa) production has increased enormously over the past five years, growing from 20,000 tonnes in 1999 to 370,000 tonnes in 2006. Similarly, cage farming has also increased rapidly, growing from just 600 cages in 1990 to over 40,000 in 2003. Marine fish farming is still in its infancy in Vietnam, due primarily to the lack of local expertise in hatchery production. The Vietnamese government is actively encouraging the development of the aquaculture sector through tax and other incentives.