SeaDragon says customer has confirmed order for Omega-3 fish oil

Sea Dragon chief executive Nevin Amos who started in the role last October
seaadd to my Stocks

SeaDragon, which manufactures fish oils for health supplements, said a customer has confirmed an order for its refined Omega-3 fish oil and it is in discussions to meet their future demand.

The order - for two full shipping container loads of refined Omega-3 fish oil representing 32,000 kilograms - is the first "significant order of refined tuna oil Omega-3 product from our new refinery and represents the culmination of months of discussions and product testing by the customer," the company said. Discussions are ongoing regarding any future demand.

Last month the company reported a wider annual loss for the year ended March 31, largely due to the time it has taken to transition the business from its legacy Omega-2 business to Omega-3 fish oils produced in the new refinery. The company said its net loss was $6.7 million versus $5.5 million in the prior year.

SeaDragon said several other potential Omega-3 customers are currently working through their own assessment processes for both semi-refined and fully-refined tuna oil products and it anticipates receiving orders in the coming months.

It also said that it had identified some minor deficiencies and related process improvements that it can make to satisfy regulatory and customer specifications, which will result in higher margins on subsequent orders. This involves minor capital expenditure, and will be completed within the next few weeks, it said. It did not specify an amount.

Regarding possible headwinds, it said recent changes to European Union quality standards may limit its ability to secure orders from some customers selling into the European market - but only in the short-term.

Separately it said it has attained Halal certification for both its facilities, following an audit by the Federation of Islamic Associations of New Zealand, a "prerequisite requirement for one of the large customers we have been negotiating with."

The certification opens up several markets where Halal is a market access requirement and means that SeaDragon fish oil products have been formally certified by FIANZ as fulfilling the conditions required to be classified as Halal, in terms of product source, manufacturing process and contamination control.

The stock was trading up 20 percent to 0.6 of a cent and has fallen 51 percent over the past year.


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Assuming Omega 3 oils trade about $50/kg, lets hope they dont fall off of the boat! Good on them

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Fish oil will not be a problem of price. It will be a problem of availability," said Jean Francois Mittaine, a fishmeal analyst with 30 years of experience in the sector, and editor of Fish Oil & Meal World.

A sales manager at one of Peru's seven major fishmeal and oil exporters echoed this.

Fish oil stocks in Peru are "very low, this is a product that no one keeps in stock unless it is treated," said this sales manager. "So fish oil, whatever is the price, will not be available."

This source said prices for aqua-grade fish oil could climb to $2,500 per metric ton, FOB Peru, as a result of the limited supply expected out of Peru for the second anchovy season.

For omega-3 grade, this could go to $3,000/t, he said.

$2,500t would make it three times the price of rapeseed oil -- trading at $820/t in September according to the International Monetary Fund -- said Mittaine

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Good to hear they now have 1 customer. But surely they need more than 1?

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"In securing this order, we identified some minor deficiencies and related process improvements that we can make to satisfy exacting regulatory and customer specifications. This will allow us to achieve higher margins on subsequent orders than achieved in the current sale."

I hope shareholders also read this caveat buried in the middle of the announcement. considering they didn't reveal the pricing and going on SEA's track record, my thinking is that they sold this lot at a loss to try and get a long-term customer on board. Better hope it does turn out to be a long-term customer if true, as bleeding even more cash and not having any other customers this company really is on a razor right now!

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