Slide 1: Commodities Group Limited ASX Announcement
COMMODITIES GROUP LIMITED Our Ref: CGL ASX Announce Moelis & Company Corporate Presentation (419) 29 July 2014 ANNOUNCEMENT 419 Company Announcements Office Australian Stock Exchange Level 4 By ASX Online 20 Bridge Street Number of pages: 66 SYDNEY NSW 2000 (including this page) Dear Sir Commodities
Slide 2: Corporate Overview Presentation
Commodities Group (ASX: COZ) Corporate Overview Presentation July 2014 Presented to Moelis & Company
Slide 3: Disclaimer
Disclaimer This presentation has been produced by Commodities Group Limited (CGL or the Company) only and may contain forward looking statements that are based on management’s current expectations and beliefs and are subject to a number of factors and uncertainties that could cause actual results to
Slide 4: About Commodities Group Limited
About About Commodities Group Limited Commodities Group Limited (CGL or the Group) is an ASX listed company (ASX: COZ) holding two separate subsidiary companies each operating in emerging, non‐conventional commodities areas: aquaculture and environmental services. The companies: Seafarms Group Limit
Slide 5: Table of Contents
Table of Contents 1. About Commodities Group Limited 5 2. Seafarms Group Limited (Seafarms) 8 3. Aquaculture & Seafood 10 Global Australia 4. Seafarms Operations 21 5. Project Sea Dragon 35 6. Applied Research & Development 54 7. Financial 60 4
Slide 6: Commodities Group Limited Overview
1. Commodities Group Limited Overview
Slide 7: Commodities Group Limited (ASX: COZ)
Commodities Group Limited (ASX: COZ) COZ now houses two separate operating businesses: Commodities Group Limited Seafarms Group CO2 Australia Limited Limited Prawn Growout Operations CO2 Advisory & Consulting (Cardwell, QLD) Prawn Hatchery (Flying Carbon Banc Fish Point, QLD) (Carbon & Energy Tradin
Slide 8: CO2 Australia
CO2 Australia • Carbon Management • Environmental Offset o Australia o Asia • Environmental and Land Management • Carbon Banc 7
Slide 9: Seafarms Group Limited (Seafarms)
2. Seafarms Group Limited (Seafarms)
Slide 10: About Seafarms
About Seafarms • Seafarms is a new Australian agri‐food company operating, building and investing in sustainable aquaculture production platforms producing high‐quality seafood. • Seafarms is currently one of the largest producer of farmed prawns in Australia growing, processing and distributing the
Slide 11: Aquaculture & Seafood
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Slide 12: Market Opportunity: Demand for Protein
Market Opportunity: Demand for Protein Growing Population and Increasing Wealth Underpinning the Demand World Agri-food Demand by Region, 2007 and 2050 (US$b) for Protein: Global population is expected to increase from 7 billion today (Source: ABARES) to 9 billion by 2050. Over that time the world's
Slide 13: Food Demand in Asia
Food Demand in Asia Demand for food in Asian is expected to double by 2050, accounting for 70% of the global increase 3,071 Asia 1,503 1,993 Rest of World 1,350 1,745 China 798 Breakdown of Asia demand 511 India 225 24 years 815 Rest of Asia 480 ‐ 1,000 2,000 3,000 4,000 Billion (2007 US$) 2050 2007
Slide 14: Global Protein Production
Global Protein Production • Aquaculture: 2020 predictions o The fastest growing protein sector for last 30 years o Will produce more than 80 million tonne per annum by 2020 • Aquaculture is the third largest protein industry behind poultry & pork. • By 2050 aquacultured ‘white fish’ will equal chick
Slide 15: Seafood Industry: Key Features & Drivers
Seafood Industry: Key Features & Drivers Global Total Seafood Production 2000 – 2010 (& projected to 2020) Fisheries are the last wild catch source of protein but wild catch supply cannot sustainably increase. 14
Slide 16: Investment & Opportunities in Aquaculture
Investment & Opportunities in Aquaculture • Positive demand function, reducing supply function = supply shortfalls • New technology platforms – opportunities for growth • Investment diversification opportunity in agriculture o Aquaculture as a sub‐asset class of agriculture • Sector long‐term profit
Slide 17: Aquaculture in Australian Context
Aquaculture in Australian Context Total Australian fisheries including Australian Fisheries Exports 2010‐11 aquaculture production for 2010‐11* • Total – $1.2 B (unchanged) o 235,000 tonnes (down 4%) • China – $146 M (but up >300% on FY 09‐10) o gross value $2.23B (up 2%) o Total export value $1.2B
Slide 18: Why Prawns/Shrimp?
Why Prawns/Shrimp? • Global shrimp production is 7 million tonnes in total with 4.3 million tonnes derived from aquaculture Prawn aquaculture • Most important internationally traded fishery 3.15 M tonnes commodity (in value) Asia 73% of world total of 4.3 m Mt • China • accounts for 15% of total val
Slide 19: Project Groper: Queensland Industries Consolidation
Project Groper: Queensland Industries Consolidation Local Acquisitions • There are three opportunities to acquire another three properties to create ‘economies of scale’ for SGL: Consolidation of Hatchery facilities (from 3 to 1) Consolidation/development of Processing facility Bulk purchasing
Slide 20: Australia's Prawn Supply & Demand
Australia’s Prawn Supply & Demand Australian production of 25,500T Australia imports 31,500 tonnes, is mainly wild catch. most from China, Thailand and Queensland and Gulf of Vietnam. Carpentaria are the largest wild Imports make up >60% of fisheries. Australian prawn consumption. Aquaculture is con
Slide 21: Rapid, Unregulated Expansion in Asia
Rapid, Unregulated Expansion in Asia • Growing concern over levels of contaminants in Asian cultured seafood products. • But Australian aquaculture production systems must be able to: o Deliver high‐quality, consistent volumes of produce o Operate with minimal environmental impact Alarm at antibioti
Slide 22: Seafarms Operations
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Slide 23: Current Operations
Current Operations • Australia’s largest farmed prawn producer o 1100 tonnes (2014) o Increasing to 1600 tonnes (2015) • Vertically integrated grower, processor and wholesaler o Hatchery & breeding centre o Growout o Processing o Distribution • Produce well know brand – Crystal Bay® Prawns o Austral
Slide 24: Operations Senior Management
Operations Senior Management Dallas Donovan – Director Aquaculture Operations • 20 years international aquaculture management experience including: o breeding programs & hatchery operations o production; harvesting & processing; o global sales & marketing o formerly Director Aquaculture National Pra
Slide 25: Operations Location
Operations Location Current locations • North Queensland • Cardwell • 2 growout farms Cairns • Flying Fish Point Flying Fish Point Cardwell • Hatchery Townsville • Western Australia • Exmouth Queensland • Breeding Centre Brisbane Exmouth Queensland Western Australia Australia STRICTLY CONFIDENTIAL –
Slide 26: Operations
Operations Hatchery – Flying Fish Point, Innisfail (13 ha/12 Broodstock ponds) Cardwell – Farm 1 (56 ha/48 ponds) Cardwell – Farm 2 (72 ha/62 ponds) Broodstock Facility – Exmouth WA 25
Slide 27: Hatchery
Hatchery Hatchery intake settlement ponds Hatchery broodstock ponds Post larvae tanks Hatchery algal tanks Hatchery maturation tanks 26
Slide 28: Growout
Growout • Isolated, clean growing environment (no treatment of intake water required) [mangroves act as natural filtration system] • Ideal tropical temperatures for year‐round growing • 2 separate (but adjacent) sites to mitigate disease risk [buffer zone between Farm 1 & 2] Grow out ponds Paddlewhe
Slide 29: Processing: Receiving & Sorting
Processing: Receiving & Sorting Hopper from receival area and first inspection Prawns receival area 4‐line proprietary Vibrating Singulator Input to Singulator from receival area 28
Slide 30: Processing: Cooking
Processing: Cooking Member of Seafarm Quality Control team inspecting cooked product KM automatic cooker Raw brine freezer Inspection of Sashimi grade product prior to freezing 29
Slide 31: Processing: Chilling & Pack Out
Processing: Chilling & Pack Out Cooked product chillers Raw product pack out Cooked product being sorted out of brine chiller Cooked product pack out 30
Slide 32: Processing: Packing & Boxing
Processing: Packing & Boxing Modified Atmosphere Packaging (MAP) machine Boxing of product for despatch Marel packaging machine 31
Slide 33: Sales & Marketing
Sales & Marketing • Arrangement with Blue Harvest o Specialist seafood sales and marketing agency o Excellent knowledge of and extensive history with Crystal Bay® Prawns o Responsible for Crystal Bay® Prawns sales & marketing in Australia and NZ since July 2011 32
Slide 34: Sashimi-grade prawns: Branding, Trademarks
Sashimi‐grade prawns: Branding, Trademarks • Sashimi grade prawns have been successfully exported to Japan and other Asian countries • Competitively priced in the Japanese market • Strong brand establishment strategy in local and overseas markets, provides opportunity to diversify production range b
Slide 35: Market Expansion
Market Expansion • Export Development • DAFF Export Accreditation expected Q3 2014 • Export customer list being developed • Taiwan, Japan, Europe • Retail Expansion • Move from “behind the glass” to everyday freezer • New retail ready packs • Import replacement • Brand Extension • Ready to Eat & sau
Slide 36: Project Sea Dragon
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Slide 37: Project Sea Dragon: The Concept
Project Sea Dragon: The Concept • Large‐scale, integrated, land‐based • Stage 1 aquaculture project in northern Australia producing world class volumes of Black Tiger o 1000ha growout + headworks Prawns – a high quality/high value seafood o Imported feed commodity – for export markets. o Hatchery (D
Slide 38: Current Animal Protein Production Model
Current Animal Protein Production Model 37
Slide 39: Seafarms' Vision
Seafarms’ Vision And this is Seafarms’ vision for a new northern Australian animal protein production model. 38
Slide 40: Industrialised, Land-based, Aquatic Protein Production System
Industrialised’ Land‐based, Aquatic Protein Production System • Scale & industrialisation o Reduce costs of production and increase reliability of supply o Long‐term offtake agreements o Volume discounts for inputs • Advanced animal production systems approach • Leveraging Australian advantages o ‘W
Slide 41: Potential financial return of WA land-based aquaculture
Potential financial return of WA land‐based aquaculture dwarfs other agricultural land uses Production Area Total Value $ Return Land System Production (ha per year) ($) per ha Ord Irrigation Stage 1 General agriculture 7,074 $20.7M $2,926 / horticulture Sandalwood 6,163 $92.8M $15,058 Total irrigat
Slide 42: Development Options: NE WA and NT
Development Options: NE WA and NT 41
Slide 43: Development Options: WA and NT
Development Options: WA and NT Barge 190 nm 360 km Road 42
Slide 44: Land Tenure & Acquisition
Land Tenure & Acquisition • Changes in the Pastoral Lands Act (NT) enable security of tenure for Project Sea Dragon subject to: • NPU Permit; Environmental Approvals, Aquaculture Licence, Indigenous approval • Seafarms are currently pursuing opportunities to acquire freehold and leasehold land oppor
Slide 45: Infrastructure: Feed Mill
Infrastructure: Feed Mill • Feed is the most significant variable cost • Contribute to low cost producer status through improved Feed Conversion Ratio (FCR) and low operating costs • Nutritionist to optimise costs • Most feeds will be delivered in bulk to the farms 44
Slide 46: Sales, Distribution & Marketing
Sales, Distribution & Marketing Seafarms & Global Farmed Prawn Production Where do we fit on production 2012 volume scale? 1,800,000 1,600,000 • Top 10 global producer 1,400,000 1,200,000 Tonnes 1,000,000 • Top 7 nationally 800,000 600,000 400,000 200,000 0 Where do we fit on price curve? • Producin
Slide 47: How We will Operate it & What We Have Learned
How We will Operate it & What We Have Learned Operating Philosophy Knowledge levers • High Volume Low Cost Producer Size matters!! • Strategies to maximise margin per hectare • Good people matter per day • Focus on biosecurity from site selection • Combine tonnage & size and the design phase • Utili
Slide 48: Project Delivery Schedule: FEL Stages to Financial Close
Project Delivery Schedule: Front End Loading (FEL) Stages to Financial Close • Big infrastructure project approach • Front‐end Loading (FEL) • Feasibility Stages • Assessment gateways • Risk Assessment stops • CAPEX estimating • Scheduling Indicative only • SKM Jacobs – assisting 47
Slide 49: Feasibility & Engineering Reports
Feasibility & Engineering Reports 48
Slide 50: Specialist Engineering Reports
Specialist Engineering Reports 49
Slide 51: FEL3 Expenditure Outline
FEL3 Expenditure Outline • Total expected project expenditure end of FEL 2 (Q2 FY2014) • ~$12M (100% funded by Seafarms) • Expected expenditure end of FEL3 (Financial Close) • BFS expenditure $25M • Engineering $10M • EIA $10M • Other costs $5M • completion circa Q4 FY2014 (= FID) 50
Slide 52: Development CAPEX Overview
Development CAPEX Overview Phase 1 Phase 2 Phase 3 Totals Stage 1 2 3 4 5 6 7 (Year) Production 1,000 1,000 1,000 1,500 1,500 2,000 2,000 10,000 (ha) Production Cumulative 12,000 24,000 36,000 54,000 72,000 96,000 120,000 120,000 (tonnes) CAPEX ($M) 150 150 150 200 200 300 300 1,450 CPX/ha $1.5 $1.5
Slide 53: Next Steps
Next Steps • Acquisition of site • Completion of FEL 3 studies o Detailed reports Site selection Engineering and Constructability Class 4 Cost estimate Operations Markets and Marketing Environmental and planning approvals + BFS financial expenditures • Partnering arrangements o Partner
Slide 54: Our Feasibility Key Partners
Our feasibility Key Partners Consultants & Advisors 53
Slide 55: Applied Research & Development
6. Applied Research & Development
Slide 56: Key Research & Development Areas
Key Research & Development Areas Environment Health Animal Species Family Nutrition & Genetics 55
Slide 57: CSIRO: World Class Aquaculture Scientific Research Organisation
CSIRO: World Class Aquaculture Scientific Research Organisation • Forefront of Australian prawn farming R&D. • Key areas of research –driving a more sustainable and profitable industry future • CSIRO has undertaken several consultancy projects with Seafarms • CSIRO & Seafarms • RD&C Agreement signed
Slide 58: Genetics
Genetics • Select and improve key traits (growth, reproduction, health) • DNA selection and marking o Qld industry using G8 broodstock (8 generations of selection) Major increase in growth rates/weights Applying benefits from multiple genetic backgrounds • Australian Research Council Industrial
Slide 59: Combined Effect of Genetics and Diet
Combined Effect of Genetics and Diet Standard feed Novacqtm Feed G8 Wild 58
Slide 60: Engineering & Technology
Engineering & Technology • Feeding • Acoustic input auto feeding • Aeration • High efficiency/low energy cost aerators • Diagnostics • Rapid test and diagnostic systems • Integrated with water quality testing & management • Processing • Low impact processing • Modified atmospheric packages (extended
Slide 61: Seafarms Financial
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Slide 62: Financial Model: Key Assumptions
Financial Model: Key Assumptions Key Assumptions Revenue $11.00/kg FOB Fremantle which is equivalent to around $17.60/kg for HLSO CIF into USA or $8.01/lb. $1,000 per tonne delivered to site. This is based on a feed formulation prepared by CSIRO, the cost of ingredients and sourced in Perth and the
Slide 63: Project Sea Dragon: Operating Financials
Project Sea Dragon: Operating Financials Seafarms has developed an integrated financial, bio‐economic and logistics model to assess the feasibility of the first production module and to undertake various sensitivities. Note, the model shows continuous development of the entire 10,000ha project (not
Slide 64: Seafarms Group Financial Vision
Seafarms Group Financial Vision The model output below incorporates: the ongoing operation of the Seafarms Queensland operations; subsequent expansion in Queensland (through acquisitions) ; and Project Sea Dragon coming into production in 2017. Production (tonnes) 2015 2016 2017 2018 2020 2025 Grope
Slide 65: Key Investment Attributes
Key Investment Attributes Demand for Animal • Global food demand is forecast to increase by 70% to 2050 due to increases in population and higher demand for animal protein resulting from increasing global affluence Protein • Existing production technology, coupled with advanced breeding and feed pro
Slide 66: Contact Us
Contact Us Seafarms Group Limited Level 11, 225 St Georges Terrace Perth WA 6000 PO Box 7312 Cloisters Square WA 6850 T. +61 8 9321 4117 F. +61 8 9321 4411 E. info@seafarms.com.au