Join our daily newsletter At The Bell to receive exclusive market insights
- Seafarms Group (SFG) expects its Project Sea Dragon to cost more than previously reported due to steel and copper prices
- Previously the company reported capital works costs of between $275 million and $290 million. These are now expected to be between $370 million to $410 million
- The extra costs are mainly due to COVID-19 impacts, which has led to increases in the price of steel for project infrastructure and copper for electrical works
- Additionally, the company has given a further $17 million in work to the head contractor, Canstruct, bringing the contract to $95 million
- Seafarms is down 8.77 per cent and is trading at 5.2 cents per share at 1:57 pm AEST
Seafarms Group (SFG) is expecting its Project Sea Dragon to cost more than previously reported.
The aquaculture company is constructing a prawn facility in the Northern Territory, which is expected to produce between 130,000 and 180,000 tonnes of black prawns annually.
Once fully developed, this multi-site project is set to become one of the largest black tiger prawn operations in the world.
In June, Seafarm estimated the cost of capital works for stage 1a of the project was between $275 million and $290 million.
However the company is now expecting the works to be between $370 million to $410 million, with the true costs forecast to be towards the lower end of this estimate.
The extra costs are mainly due to COVID-19 impacts, which has led to increases in the price of steel for project infrastructure and copper for electrical works.
Seafarms made it clear that the original estimate did not include contingencies or escalation.
Additionally, the company has given a further $17 million of work to the head contractor, Canstruct, bringing the contract to $95 million.
The extra funds will cover the project’s jetty hardstands, roads and quarry services.
Even though Canstruct has been awarded this large contract, it has been told to proceed with $57 million of the work to remain within the funding limits of the recent capital raise.
Seafarms was down 8.77 per cent and is trading at 5.2 cents per share at 1:57 pm AEDT.
