South Australian oyster producer Angel Seafood has acquired additional leases in Cowell and Coffin Bay as part of a growth strategy that will immediately boost production by 20 per cent to 12 million Pacific oysters a year.
Already the largest producer of certified organic and sustainable pacific oysters in the Southern Hemisphere, the publicly-listed company this year fast-tracked its plans to build a retail sales program for its Coffin Bay oysters following the closure of restaurants in March due to COVID-19 restrictions.
In a statement to the ASX this morning, Angel said its “3-pillar growth strategy” would ultimately double its annual production to 20 million oysters; increase productivity and lower costs; and, build its brand to improve oyster pricing.
Through the new lease agreements, Angel has secured an additional 6.25 hectares on Eyre Peninsula — 4.25ha in Coffin Bay and 2ha in Cowell.
About 2ha of the Eyre Peninsula leases in Coffin Bay come with existing good quality infrastructure that will immediately increase production capacity from 10 million to 12 million oysters per annum.
The 6.25Ha of water leases will be held under leasing agreements with terms ranging from 6–15 years (including renewals) at an aggregate cost of $138k per annum, with options to buy at the end of the lease periods, or first right of refusal. The lease costs will be fully funded through operating cash flows.
Angel Seafood CEO and founder Zac Halman said the board believed the time was now right to move to the next phase of Angel’s evolution.
“We are pleased to have entered into new lease agreements for additional high-quality water in the Eyre Peninsula, increasing the production capacity of our successful multi-bay strategy,” he told the ASX in a statement this morning.
“Demand for our premium organic oysters has continued to grow and we are excited to be able to expand our capacity in the region.
“With 2ha of the new leases in Coffin Bay having infrastructure in place, this means that we can get straight to work and produce more Angel oysters from the start of 2021, while undeveloped leases are earmarked to be rolled out for our flip-farming trials.”
Angel Seafood last month reported record sales of 2.7 million in the September quarter as its retail strategy grew at pace and restaurants around Australia increased capacity.
The FY21 first quarter result generated $2 million in revenue and was 78 per cent up on last year and more than double the number of oysters sold by the company in the September quarter two years ago.
The Port Lincoln-headquartered company today also announced the trial of a new bio-dynamic oyster farming system, called “FlipFarm” in Coffin Bay.
The farming method will be funded from Angel’s existing balance sheet and the benefits of increased productivity and lower operation costs are expected to generate an attractive internal rate of return and short capital payback period.
It says while this will be the first time this modern farming method has been trialled on the Eyre Peninsula, FlipFarm systems have been successfully applied in New Zealand and are known to increase productivity and require less labour, significantly lowering operating costs.
“This modern bio-dynamic farming method has the potential to be a game changer for Angel’s productivity and perfectly aligns with Angel’s values of organic and sustainable oyster farming,” Halman said.
“This method has been successful in international oyster farming, and we hope the broader industry can also benefit from our trials through more efficient farming methods and ultimate environmental care.
“Our retail strategy is going strong and we are proud to have been featured in Costco’s Christmas catalogue and Drakes’ weekly catalogues this year. This is testament to Angel’s growing recognition of its capability to guarantee supply of organic, sustainable and high-quality oysters from pristine waters in South Australia.”
Angel Seafood’s share price was steady this morning at $0.17 giving it a market cap of $23 million. The company’s share price started the year at $0.19 but fell sharply in February and March to bottom out at about $0.09 in late March before recovering in recent months.
Eyre Peninsula, about 250km west of the South Australian capital Adelaide, is known as Australia’s seafood frontier and is a premium producer of tuna, abalone, oysters, lobster and kingfish for global export markets.