Keep River Road - Contract Awarded, page-50

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Candyman1nz1nz

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21/08/19

16:17

Post #: 40079721
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Originally posted by Skiman4: ↑

I did attend the meeting and all 4 Directors were there. May have been 20-30 people there (didn't think to take a quick count) incl a couple of journos. Spoke to a few and they seem to have been long term investors rather than traders.

The formalities were over and done with quickly and then there was some updating on current status and some Q&A.

As might have been expected there were a number of questions around the delayed timing of the project and when we might actually see prawns being sold. There was acknowledgement that the delays are all due to the difficulties in locking in the finance and are frustrating for everyone. Unsurprisingly Banks are reluctant to provide finance for stage 1 and NAIF appears to be the leading option for that. If NAIF does not come through then they do have a plan B and a Plan C however they were not prepared to disclose what they might be for the obvious commercial reasons.
The NAIF application went in last December (had to wait until Legune Station tenure was secured) and first response was in March - it seems that NAIF does nothing in a hurry which is why both sides of politics were getting very frustrated with it before the last Fed election.
Lots of interest from Ministers but political intervention unlikely until all proper processes have been gone through (even if frustratingly slow).

Assuming that the finance is secured this year we are looking at 2 dry seasons + 160 days for first prawn sales = late 2021.

There was some discussion around the works underway at Exmouth and Bynoe which are some of the key components of the PSD project.

Chris Mitchell explained that most brood stock for prawn farming comes from wild stock (this includes SFG Qld farms) which carries with it risks, particularly with disease etc.
The key PSD difference is the development of Specific Pathogen Free brood stock and they are now onto the second generation of 6 SPF free families at Exmouth. This has never been done in Australia. He made the point that the chicken industry has been doing this for decades.
The Exmouth expansion and the Bynoe development are key sub projects so that once the ponds are built they will have the stock to put in them.

There was discussion about marketing and sales. Ian explained that there is plenty of interest out there from trading houses to take large parts of the proposed production as bulk a commodity however this is not of interest. SFG will be pitching the product at the premium end of the market.
They have already sent batches of the Tigers to Japan for evaluation and Govt testing - getting ag products into Japan is hard work.
There was also some discussion about the possible extension of the airstrip at Kunanurra (not a PSD initiative) which, if it were to happen, opens up the possibility of of exporting fresh rather than frozen prawns into Asia ($1.45 per kg on a 737 freighter).

The costs of delays was a question from the floor and a ballpark given was approx $5-6m per season (overheads etc) but the extra time is being used to fine tune engineering designs, looking for efficiencies etc. One plus to come out of the delays is that the build costs have eased - tenders for works have been coming in comfortably under budget.

They have also recognised the need to improve investor relations/PR as we get closer to a start and that is happening - we will see more news, improvements to the website and more visual information.

Bottom line for me was that the project continues to progress, yes financing is painfully slow but all eggs are not in one basket, and when the finance is locked in this is going to be a huge success.

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Thanks for that report...very informative and when it comes from attending the meeting and seeing emotions etc, it’s much better than just written words in a report. Thanks again, may take bit longer than I originally thought, but this stock will eventually fly I am sure.

SFG Price at posting: 7.7¢ Sentiment: Hold Disclosure: Held
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