Consequently, the company said it does not expect to be able to transfer fingerlings to sea cages for experimental grow out early enough in the season, to achieve the company's second goal of SBT juvenile winter survival.
To this background, and given the company's limited financial resources and need to preserve liquidity, the company anticipates suspending its Tuna Propagation Programme for at least the 2013/14 summer, and to direct its limited financial resources to its Yellowtail Kingfish operations.
Whilst the company continues to believe in the commercialisation potential of the successful closure of the SBT lifecycle, investment beyond the company's current financial resources will be required for this goal to be achieved.
To this background, the directors believe it prudent to write down the significant investment in this project as at 31 December 2012 to an estimated net realisable value, in case the funding is not available in the future to reactivate this programme. The net impact on the first hhalf of 2013 results is likely to be in the order of $30 million, a non-cash outgoing.
Search for International Strategic Partner
The company and its advisors have been unable to secure a strategic partner willing to make a significant investment in Clean Seas given the present investment climate, the previous ongoing funding requirement of the SBT propagation program and the significant prior losses arising from excess mortalities in the Yellowtail Kingfish division.
It is to this background that the board and management are directing their attention to the company's survival, within the constraints of existing cash reserves supplemented with the sale of surplus assets.
Now that the Yellowtail Kingfish health issues have been addressed, the company is planning to either continue with a further scaled down Yellowtail Kingfish division in its own right, or in joint venture with a domestic partner.
The contract with the company's external financial advisors concludes on 31 December 2012 following which the Board and management will then hold discussions with a shortlist of identified potential domestic aquaculture partners.
Yellowtail Kingfish Division
The company is pleased to confirm that since the addition of supplementary Taurine to all Kingfish feed, there has been a dramatic and sustained recovery in fish health evidenced by:
- Reduction in mortalities from a high of 1% per day to normal levels
- Improvement in growth rates, returning to normal levels for Year Class 2012 and a consequential improvement in FCRs (feed conversion ratios)
- Return to robust health and appearance, good fish colouring and premium flesh quality which continues to be reflected in excellent farmgate prices of +$12.50/kg
- Encouraging performance of this seasonfs juveniles which were bred from cultured broodstock for the first time in the Companyfs Kingfish programme
All of the above factors have reinforced the company's conclusion that health issues affecting prior yearsf Kingfish operations appear to be predominantly attributable to this dietary deficiency. The company has been forced to secure an alternate source of feed supply, pending intended negotiations with former suppliers in attempting to resolve the company's assertions.
The company's cash position as at 14 December 2012 was some $3.934 million, which compares to the previously announced cash position of $3.639 million as at 30 September 2012. This position has been achieved through tight cash controls, the sell down of Kingfish inventory and the sale of surplus assets.
The company remains largely debt free and all significant assets remain unencumbered. With the Kingfish growth season now commencing in earnest, cash limitations will necessitate either Kingfish volumes being further reduced or the Company will need to be successful in securing a domestic Yellowtail Kingfish joint venture partner.
No rights issue is planned at this time, although the Board is considering all other capital and debt raising options including the possibility of a Share Purchase Plan early in the New Year. If endorsed, the SPP will provide an opportunity for shareholders to assist in stabilising the company through the present challenging conditions.