Norwegian land-based salmon farmer Salmon Evolution AS has entered into a Heads of Terms with Artec Aqua for the planning of the phase 2 build-out at its Indre Harøy facility on the country’s west coast.
In principle, phase 2 is expected to be identical to phase 1. It will add a further 7,900 tonnes of head-on gutted weight (HOG) of annual production, bringing the total planned salmon production volume to 15,800 tonnes HOG per annum, Salmon Evolution advised in a filing with the Oslo Stock Exchange, Oslo Børs.
Artec Aqua is the turnkey supplier for Salmon Evolution’s phase 1 project at Indre Harøy where the first smolt is expected to be released next month and with the full facility currently expected to be completed in the fourth-quarter of this year.
”We greatly appreciate that Salmon Evolution has chosen Artec Aqua as turnkey supplier also for phase 2 of their land-based grow-out farming facility. This is a great recognition of our competence and execution capacity, as well as our inhouse developed hybrid flow-through technology,” Artec Aqua CEO, Ingegjerd Eidsvik, said.
The purpose of the Heads of Terms is to enable Salmon Evolution to be in a position to quickly start construction of phase 2 following the completion of phase 1.
Such a timeline requires significant preparatory activities, including but not limited to, planning, concept and detailed engineering and structuring of subcontractor tender processes, Salmon Evolution said.
Additionally, the preparatory phase will look to leverage know-how and experiences gained from phase 1 and facilitate the implementation of identified areas of improvement from biological, operational and financial perspectives.
Given the timeline with first groundworks commencing after completion of phase 1, the parties should also be able to implement learning effects obtained during the first 12 months of production.
“As the phase 1 build out at Indre Harøy now is nearing completion, we are very pleased to start the preparations for phase 2 construction. Phase 2 will stand on the shoulders of a successful phase 1 ramp-up and together with Artec Aqua we expect to realize significant efficiency gains while at the same time being able to continue optimizing the facility,” Salmon Evolution CEO, Håkon André Berg, said.
The Heads of Terms further sets out the main commercial terms to be reflected in a final design and construction agreement between the parties.
Capex for phase 2 is currently estimated at NOK 1.3-1.4 billion (US$148-159 million).
The final design and construction agreement is expected to be effectuated during first half of 2022 and will include financing reservations providing Salmon Evolution with the necessary flexibility to align the phase 2 build out with the Company’s overall financing plan.
On completion, Salmon Evolution’s Indre Harøy is expected to have an annual capacity of approximately 31,500 tonnes HOG, while itsjoint-venture facility with Dongwon in Yangyang, Gangwon-do, has a projected annual production capacity of 16,800 tonnes HOG.
