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SeaDragon expects wider FY loss as new Omega-3 refinery slow to take off

Wednesday 1st March 2017

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SeaDragon, which manufactures fish oils for health supplements, expects to report a wider loss in the year ending March 31 due to the length of time to transition from its legacy Omega-2 business to Omega-3 fish oil produced by its new refinery. 

The Nelson-based fish oil refiner said it expects to report a loss of $4.3 million to $4.5 million on a normalised earnings before interest, tax, depreciation and amortisation basis, versus a 2016 loss of $400,000. 

The new higher-value Omega 3 refinery - commissioned last year - has the capacity to produce up to 5,000 tonnes of refined Omega-3 fish oils each year and has targeted three species for crude oil supply: tuna, hoki and marine-farmed salmon.

The company said that in order to enable future sales it has focused on establishing on-going supply arrangements for crude tuna oil or CTO for processing through the new refinery. It took until the final quarter of the year to receive ongoing supply in commercially relevant quantities, it said. "This has taken longer than expected and was also impacted by the seasonal nature of CTO supply," the company's board said in a release to the New Zealand stock exchange.  While it has inked supply agreements, it does not expect to fully use the refinery's capacity in the next financial year. 

It also said that it has not yet entered any contracts for the sale of the refined oil, although several of its existing and potential customers are currently evaluating samples of the refined tuna oil. "Although no large volume sales contracts have been entered into yet, we believe our samples meet their specifications and are hopeful we will soon receive orders," it said. 

The shares were unchanged at 0.6 cents and have fallen 50 percent over the past year.

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