Deals reward 'bold' SeaDragon
Fish oil company SeaDragon says it has the potential to become the second largest shark liver oil producer in the world.
But having secured new supply contracts, dubbed a "positive game changer", production will need to run around the clock for at least 18 months before the company's new plant is commissioned next year.
Chief executive Ross Keeley yesterday told the annual general meeting a new shark liver oil and shark liver supply contract was a game changer.
The listed Nelson-based company said in June that it had secured a second major sales contract that would boost annual revenue to at least US$6 million (NZ$7.08m).
The company, Australasia's largest refiner and blender of fish oils, said the new deal would underpin its financial performance into 2016.
Earlier this month a report from research firm Edison said SeaDragon's prospects had "increased significantly" in the past few months.
In March, SeaDragon said it had signed a deal with Portuguese company Pescarias Cayon & Garcia LDA that would cover its raw materials for the next 12 to 18 months of squalene production.
Keeley said that the two contracts would yield sales of more than $7m for the year after October.
"This contract represents another significant win for SeaDragon and vindicates our decision to take bold steps to secure raw material for our squalene-processing factory."
The company raised $6.1m this year, of which $4m will be used to fund a new Nelson plant able to produce more than 5000 tonnes of refined fish oil and generate annual sales up to $50m.
Yesterday it said the supply contracts and the plant would "provide a strong platform for future growth".
The company would now look to expand its market from Australia to Asia and Europe, and from dietary supplements to cosmetics and pharmaceuticals.
"SeaDragon has the potential to become the second largest SLO [shark liver oil] producer in the world," a company presentation said.
But the current production facility would need to run constantly for at least 18 months, and require additional staff.
And because the shark liver oil business was now significant, SeaDragon would be split into two business entities, with one focusing on squalene volumes and the other on omega-3.
The SLO business would use as much as 25 per cent of the refined oil plant's capacity in its first year, the company said.
- The Dominion Post