Seafarms Group chair Ian Trahar has stepped down and the board has launched a review of the company’s flagship development Project Sea Dragon after a delay in funding arrangements.
Seafarms Group chair Ian Trahar has stepped down and the board has launched a review of the company’s flagship development Project Sea Dragon after it could not secure funding, leading to project delays.
Company chief executive Mick McMahon will replace Mr Trahar and conduct the review of the prawn aquaculture project.
In a release to the ASX, Seafarms Group said it was not feasible to finalise debt and equity funding arrangements before the end of the calendar year and the delay in funding arrangements would lead to project delays.
Mr McMahon said given these circumstances, the company would undertake a project review to consider impacts on the project schedule and costs in order to be best placed to complete funding requirements in the new year.
“In my short time with the company, I am further encouraged that significant market opportunities exist in both domestic and international markets for PSD [Project Sea Dragon] product and that many of the building blocks are in place to address this opportunity,” Mr McMahon said.
“This review will allow us to firm up all project components and establish the most effective path forward for the project.”
While Mr Trahar will no longer serve as chair, he will remain as a non-executive director.
Seafarms chief financial officer Ian Brannan is also joining the board and will serve as company secretary, replacing Harley Whitcombe who is stepping down.
The announcements come after the company revised its budget for the project in early October.
It estimated the project would cost at least an extra $80 million due to changes in scope and increasing material costs.
In June, capital works for stage 1a of the project were estimated to cost between $275 million and $290 million.
Today, the company announced the work was going to cost between $370 million and $410 million.
Stage 1a includes the development of about 400 hectares of production and nursery ponds and upstream and downstream facilities at Legune Station in the Northern Territory.
Seafarms Group told the ASX the key contributors to increased cost included the decision to increase the performance and size of the plant; the increased cost of steel, copper and construction labour; and funds associated with fixing hydrological issues at the site which have been impacting the road access upgrade.
It said the estimates included an allowance for further increases, due to changing COVID-19 border and transport restrictions.
Seafarms Group raised $107.5 million in June to start construction of the project, which will comprise of 10,000 hectares of prawn production ponds when completed.
