Howdy all. While I've read a lot of the company announcements etc I had heard other posters speculating about the last spawning/problems/failures and I was concerned the company seemed to have made some strange mistakes for industry experts.
So I called the company yesterday with a list of questions and spoke to company secretary Frank Knight yesterday for more than half an hour. (DISCLOSURE: They don't know me from a bar of soap but I've never had a company refuse my shareholder queries.) Of course, the company hadn't been making strange mistakes but continuous progress!
Some of you may understand this industry and company better than others. But for everyone else :), following is some clarification I got from my enquiries:
PREVIOUS SPAWNING WAS LOW VOLUME FOR THE PURPOSE OF R&D ONLY
The story on last years spawning is that it was an R&D project ONLY and NEVER meant to be a commercial activity. The spawning was to test the likelihood of reproduction in captivity and was successful (!)
The broodstock is the broodstock, ie used for breeding and not to be confused with fingerlings or stock intended for transfer to sea cages. They are kept in a tank used exclusively for egg production/spawning. Theyre healthy, productive and the company is very pleased with the recent spawning.
The R&D spawning was never intended for transfer to the sea cages. For a start the spawning was purposely low volume (for R&D purposes) and therefore did not justify the associated commercial expenses of the sea cage programme (feeding etc). In addition the timing of the R&D spawning would have encountered water temperature problems (too cold at about 13 degrees) had the fingerlings been intended for transfer to sea cages - which they weren't.
As the company is prohibited by law to put hatchery fish into the wild, and R&D quantities did not justify the commercial expenses of sea-caging, the fingerlings were kept in hatching tanks on land and studied. These fish were never going to survive for long in that environment but the research was essential to the breeding programme. Over time they reached about 2kg each in that tank but as expected, 100% of those fingerlings died because the company was prevented by law to release them into the wild and the tank was unsuitable for their sustained healthy growth.
THE CURRENT SPAWNING IS COMMERCIAL
The current spawning has produced millions of eggs from which they plan to transfer 25,000 fingerlings to their sea cages
There were no impediments to this spawning and based on progress they expect to transfer same to sea cages before March
The mortality rate is based on industry standards that are not publicly released but which CSS have confirmed through their experience with their kingfish breeding programmes
They project that 25,000 fingerlings (ex mortality) will grow to 500 tonne within 2 years
While price fluctuations have some analysts pulling out their hair on projected revenues and valuations, the company uses an industry average based on sales to Japan of $20 per kilo. That would make this one batch worth $10M if successful. If they can replicate that with multiple batches the projections start to look robust even without scarcity pushing prices up...
Cheers, Dan
CSS Price at posting:
24.2¢ Sentiment: Buy Disclosure: Held
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