Seafarms Group Ltd (ASX: SFG), Australia's largest aquaculture prawn producer, has seen its share price soar 86% to 13 cents in the past month – after a number of significant announcements.
The company announced earlier this month that it had secured its first international export contract. While not naming the counterparty, Seafarms says the contract is with a leading global retailer with more than 2,000 outlets.
The company says it has commenced international distribution of its Crystal Bay Tiger Prawns. The initial focus will be on 200 European outlets located in countries with high shrimp consumption. And yes, there is actually a difference between shrimp and prawns – although most of us would be hard pressed to tell the difference. (And to make it even more confusing, a shrimp in the USA is a prawn in Australia).
Seafarms currently has its major prawn farms in Queensland, but has an ambitious $1.5 billion project 'Project Sea Dragon', which would see 100,000 tonnes of Black Tiger prawns produced each year from locations in Western Australia and the Northern Territory at full production. To give you an idea, Seafarms currently produces around 1,500 tonnes per annum of Crystal Bay prawns.
It should be noted that Project Sea Dragon is still in its early stages though and Seafarms is operating at a loss currently.
The good news is that the company's environmental services subsidiary, CO2 Australia, is generating cash flow that will be put towards developing Project Sea Dragon. CO2 Australia recently announced that it had won further contracts under the Federal government's Direct Action Plans 20 Million Trees Programme. CO2 says a total of $8 million was awarded across contracts with 3 successful large-scale providers – including CO2.
It's interesting that Seafarms is yet another ASX-listed seafood producer, joining Clean Seas Tuna Limited (ASX: CSS), Tassal Group Limited (ASX: TGR) and Huon Aquaculture Group Ltd (ASX: HUO) on the ASX. Maybe Australia really is headed to become Asia's 'food bowl'.
Summary
It's clear that Australian produce is well accepted particularly in Asia and prawns could definitely be another winner. The obvious key to Seafarms is not its CO2 subsidiary nor its existing seafood farming operations, but its giant Black Tiger Prawn project.
The operation will require substantial capital funding to set up, but could deliver substantial gains if the company can pull it off.
