SEA
26/04/2016 11:50
GENERAL
PRICE SENSITIVE
REL: 1150 HRS SeaDragon Limited
GENERAL: SEA: SeaDragon - Market Update
NZX / MEDIA RELEASE 26 April 2016
SeaDragon - Market Update
Omega-3 update; Omega-2 sales slow; Revised financial guidance
SeaDragon Limited (NZX:SEA) is pleased to update the market on the following
recent events.
Omega-3 Refinery
As previously noted to the market, the commissioning of SeaDragon's new
Omega-3 refinery has been successfully completed, with the plant meeting
performance expectations. The refinery's risk management programme has been
registered by the Ministry for Primary Industries (and ongoing verification
audits have produced acceptable outcomes to date). SeaDragon has also
obtained Marine Stewardship Council Chain of Custody certification for both
Omega-3 and Omega-2 refineries.
SeaDragon believes the quality of the oil produced through its new Omega-3
refinery is of a high standard and can confirm that it has completed
commercial sales of Omega-3 product to existing and new customers.
Chairman Colin Groves said: "Our tuna oil customers require a DHA content of
at least 25% and the majority also require that strict EU eligibility
requirements be met. The new Omega-3 refinery has demonstrated its ability to
deliver refined oil that meets these high standards, which has generated
significant interest from some of the world's major buyers. We are working
with a number of companies to attain preferred-supplier or vendor-endorsement
status. Once achieved, we anticipate that additional orders will follow."
The final cost of the Omega-3 refinery will be included in the company's year
end results due to be released in late May. Management currently expects the
total cost of the Omega-3 refinery to be approximately $10.6 million (in
excess of the $9.15 - $9.55 million previously indicated), subject to
finalising certain costs still in negotiation with suppliers and including
capitalisation of qualifying SeaDragon expense items.
Omega-2 Update
The Omega-2 market has proved to be challenging in the last few months of the
financial year, with SeaDragon experiencing an extension in the sales cycle
due to what we believe is a short term softening in demand which has resulted
in downward pressure on prices.
Mr Groves said: "Based on conversations with customers, we are confident that
we will be able to achieve sales of our Omega-2 inventory, however this
process will take longer than expected."
As a result, Omega-2 inventory levels are higher than usual at year end,
resulting in reduced cash reserves. SeaDragon expects that FY16 earnings
before interest, tax, depreciation and amortisation (EBITDA) will be lower
than previously indicated to the market. Audited FY16 results will be
released in late May.
Fractionation Plant
SeaDragon has progressed the proposal for a new fractionation plant to
complement the recently completed Omega-3 refinery - the next stage of
detailed design proposals and quotations are expected in the near future.
Completion and commissioning of the new fractionation plant is now expected
to be in mid 2017.
Tuna Supply
SeaDragon has recently secured sources of unrefined tuna oil, including up to
700 tonnes over the next 12 months.
NZTE Exporter of the Year - 2015
SeaDragon was named New Zealand Trade & Enterprise Exporter of the Year at
the Natural Products New Zealand annual conference.
Search for New CEO Continues
SeaDragon's search for a CEO continues. In the meantime, SeaDragon is very
pleased to confirm that Rich Alderton has agreed to stay on as interim CEO.
For further information contact:
Colin Groves
Chairman
Tel: +64 21 928 003
About SeaDragon www.seadragon.co.nz
SeaDragon (NZX:SEA) is New Zealand's largest refiner and blender of
high-quality, internationally-certified concentrated fish oils and fractions,
including Omega-3 oils. Our oils are sourced from fish caught in the clean
and pure waters around New Zealand, in the Southern Ocean, and elsewhere. We
have more than 20 years' experience processing fish oils and we are
recognised for the quality and purity of our products. We supply health
supplement manufacturers around the world to meet the burgeoning demand for
pure, high-quality fish oils, which are scientifically proven to deliver
significant human health benefits such as lowering the risk of heart disease,
improving brain function and joint health. The majority of our supply is
exported.
End CA:00281318 For:SEA Type:GENERAL Time:2016-04-26 11:50:03
