Andfjord Salmon Group AS (ANDF) Earnings Call Transcript & Summary

Okay. Good morning, everyone. And welcome to this update from Andfjord Salmon. My name is Martin Rasmussen, and I am the CEO of the company. And today's presentation will be held in English only, and it's a combination of a physical presentation here in Oslo, combined with a webcast solution. Together with me, we have our Project Director, Jostein Nilssen; and our CFO, Bjarne Martinsen. And we will have a Q&A after the presentation, and you can submit questions through the webcast solution. Please be seated. Okay. Today's agenda is, as always, first, a brief introduction to Andfjord Salmon, and we will then look at the highlights from the quarter and subsequent events. Jostein will provide you a status of the build-out at Kvalnes, and we will look at Kvalnes Phase 2 plans and ambitions. Bjarne will cover the financials, and we will end the presentation with a summary and outlook and Q&A. But first, an introduction to Andfjord Salmon. Our ambition is to build the world's most fish and environmentally friendly facility for Atlantic salmon with a mission to serve salmon with a clear conscience. The concept is the best from traditional salmon farming in the sea combined with the benefits of being on land. We are located at Andøya, where we have endless access for a seawater where the salmon has been swimming in many thousand years, which means that it holds the perfect temperature profile. It has a stabilized salinity, it's oxygen rich, which allow us to have a very energy-efficient production method for Atlantic salmon. On land, we don't have any issues with salmon lice, algae, jellyfish, because we're sourcing the water well below the depth where these organisms are living. The fish cannot escape and we can control the organic waste since we have a closed facility. We are building the pools below sea level. And the reason for that is to avoid working against the gravity. And the principle is that we are pushing the water through the pools instead of lifting the water. So imagine that you are pushing 10 or 20 or 50 liters of water in a bathtub. This is quite easy compared to lifting it. More lifting is more muscle, higher CapEx and also higher energy consumption, which is higher OpEx. So we have 4.4 kilometers with tunnels below ground to supply enormous amount of water to all our pools on land. And on land, this is very similar to net pens, but on land where we can control and we can protect the fish against external factors like, for example, salmon lice, but we can also protect the environment with having such a high biomass in one concentrated place. We have a square pool because we have our own method to create a laminar water flow, and we are creating a cross-section of the Gulf Stream on land. Large pools with enough space, the fish can have natural behavior, and we can collect the organic waste with cleaning ROVs of the pool floors. It is not a coincidence that we are located at Andøya, because Andøya is the land area in Norway that is closest to the Gulf Stream. And the Gulf Stream is giving us a warmer water during the winter compared to the temperature we have from the coastal currents. And if we would have been a traditional salmon farmer in our area, we would have had 2 to 4 degrees colder temperatures in the water compared to what we achieved. And our first production cycle, we have demonstrated the potential with having this into the Gulf Stream. And we have very strong operational performance from the first production cycle, and this is not just a test and a pilot. This is a full-scale production with 650 tons of salmon in 1 batch. And after 1 year of production, we achieved a survival rate of 97.5%. This demonstrates that the concept is working very well on behalf of the biology, which is the most important. Another very important experience is the feed conversion rate, which is the highest cost you have as a salmon farmer, which ended up at 1.05, and we had a better growth compared to our initial production plan, because we have a steady-state production every day. We're not affected by a winter storm, or algae bloom, or predators, and also the impact with having the Gulf Stream so close to us. We also have proven that we can produce salmon with very low electric costs and have proven that we can produce 1 kilo of salmon within 1 kilowatt hour. And also, we have proven that we can have a high price on the salmon and also a high quality and a superior share. So now over to the highlights from the quarter. Kvalnes Phase 1 is on track. After 2 years with the development of the technology with our supplier, Cflow, we have developed now a solution to increase the production capacity with 20%. We have initiated the construction of Phase 2a, 4 new pools in addition to the first 5 in Phase 1. Financially, we have secured a NOK 1.4 billion package with bank loan, sale leaseback and private placement. And our design on the pools considers regulatory change to handle regulatory risk in the future. I will leave the word over to Jostein, and he will give you a good description of an introduction of what we are doing at Kvalnes. But before that, I will also show you a movie from the island. [Presentation]

All right. Thank you, Martin. As this illustration shows, really just to emphasize that the Phase 1 is the 4 first pools, K1 to K4 in the front here. In addition, you have the tunneling systems, the harbor area, and all the technical infrastructure as well. So that is part of the Phase 1 project. Further back, you see the Phase 2a, that is the next 4 pools. And then at the end, you have the Phase 2b, that are the 4 last pools that we are currently building at Kvalnes. All right. So our inlet and outlet tunneling system, the waterways, where are we at with that? We have now completed and now that we have fresh water available to support an annual production of 48,000 tons of salmon. The work stream, it's on track, meaning that in just over a year, we have produced 4.4 kilometers of tunnels. With only the -- on the outlet tunnel, we only have the breakthrough into sea remaining. For the inlet tunnel, we have 70 meters left before we then are to the breakthrough into sea. All the infrastructures for the tunnels below the pools are now completed as well. And then the remaining part now is the concrete work in the tunnels that are ongoing. This is infrastructure to handle the breakthrough into sea and also for us to allow the routing of water. We are focusing on that when we have the breakthrough, we would like to route the water up into a safe area, meaning that we are using the access tunnels, taking the wave of the water following the breakthrough, we are routing that up the access tunnel. So that is the reason why we are now running concrete works in the tunneling system. We plan for the breakthrough for both the inlet and outlet tunnel in Q2, and that will be coordinated based on the overall progress with the project. The infrastructure and the interfaces between the tunnels and pools are in place. This means that we have now built 4 vertical inlet shafts, bringing the clean sea water into the pools. And then we have 6 vertical outlet shafts, taking the water from the pools back into sea again. For that to happen, as you can see on this picture, these are the inlet shafts where the fresh water is coming in. And then you have -- on the other side of the pool, you have the outlet shafts where the water from the pools are leaving. The pools are built back to back so that they share a common outlet and a common inlet. Also, if you look at the areas next to the shafts, those are the areas where we have taken height for that we, in the future, potentially would have to deal with disinfection and the treatments of inlet water and potential outlet water. So these are the areas that we have included already now in our construction work to allow for that to happen based on whatever regulatory issues we could face in the future. Also, if you look at the people working next to there, you get an idea about the dimensions of the pool and the constructions that we are currently performing. So where are we at with the pool construction? We are on track. The UHPC, the ultra-high-performing concrete that we put on the wall element are working now very good. We do that in a factory. I will come a bit back to the reason why we are using the UHPC, but that is working very well now. So the production in our factory is going very well. All the support functions now, the columns and the supports, have been prepared and are in place for both K1 and K3 pool, allowing us to start assembling all the wall elements now. So we are almost 80% complete in the K1 pool now. And all those wall elements has been put in place in a 14-day period, because when you have stacked up all those elements, to actually have them assembled is done very quickly. The use of ultra-high-performance concrete on the wall elements, making it very smooth, allows us not to use traditional coating. We think this is, I hope there are no coating experts or coating manufacturers here at site -- or in the audience, because -- but we honestly think that this is a way better solution. We add on this surface in the factory. The duration of that, we will not have to maintain it or repair it for -- they have guaranteed 100 years. We say that, okay, if we at least have a few decades before you need to start going in and do repair, that is a huge benefit for us. I would just take you back one slide. So if you look at this side, you see the amount of wall elements. These are 50 meters high. There are huge areas that has to be protected against the fish, and you are really dependent on a smooth surface. To have that already in place, not having to do the repair as traditional coating would have to do after 4 to 7 years, you most likely would have to start to do a repair job. These are to be okay and functioning for decades. Yes, I won't go further into details. But the UHPC has been a huge factor for us now. And we see that quite a few in the industry are looking at us now for having this type of surface in their own systems. So the harbor area. We are now dredging the harbor that is ongoing, both through a barge and then from land as well. As you can see now, we have put this temporary breakwater construction at inlet, and that is really just to protect that ongoing operation, not being weather dependent or whatever, so that, that can be ongoing continuously. That temporary will, for sure, be removed when we start to take the harbor in operation. We're also now preparing to start the key work inside the harbor. In addition, I can mention that we have already also started with the technical infrastructure that is going into the ground. So all the piping going into the ground from the pool area down to the harbor and then also through the processing facilities for the sludge handling, the feed handling, and the oxygen handling as well. So that is also on track and currently being done. To summarize, the overall progress for the project is very good. Having this tunneling system 98% completed, being the biggest risk factor for the project in my thoughts. Having that now come this far is very good. And also with the harbor, that is moving along very good. No issue with that. We have ramped up now and are now into peak production for all the concrete work. Lots of concrete work currently going on at Kvalnes, and for sure, with the key focus on completing the pools in the following sequence: K1, K3, K2 and K4. Technical infrastructure as well moving along very good. So in total, the progress for the Phase 1 is very good. And in addition, we have also started the Phase 2a construction, mainly focusing on the technical infrastructure, but also concrete work. And with that, I will leave the word back to Martin again.

Thank you, Jostein. It's always encouraging to hear you talking about UHPC and concrete. Okay. And now we will go through our plan on how we will optimize the construction, reduce regulatory risk and utilize the pool capacity resulting in higher production volumes and lower operational risk. Kvalnes Phase 2 plans and ambitions. As Jostein said, very good progress and momentum for Phase 1, allowing us to have a very convenient transition to next phase. Infrastructure, machinery and expertise can now be directly moved to the next phase, ensuring no interruption in their construction. And we have continuously worked to optimize the construction, and even though we divide project into phases, that is clearly most optimal to view the entire Kvalnes project as one project. And this means that while Phase 1 is being completed, we will start the next phase, which includes a total of 9 pools and fish logistics systems for the entire Kvalnes area. Two years of developing the concept together with our suppliers have absolutely resulted in finding better solutions both operationally and technologically. What we now have developed is assistance for moving the fish between the pools in a very fish-friendly manner. And good utilization of capacity largely depends on logistics without compromising on the fish welfare and the quality. In the original design, the logistics were characterized by an operation with a lot of manual adjustment of the system to move the fish. While the fish had to be pumped from the pool walls and this requires pumps and it's much more stressful handling of the fish. And additionally, we didn't have the flexibility to move the fish between all units as we now achieved with the new system. In summary, this gives us flexibility for more splitting of the fish and a reduction of the operational risk. And the total effect of this system, including the post-smolt is an increased production capacity of 20%. So at the 10,000 tons MAB, we are targeting an annual production of 23,700 tons, and the volumes is HOG and post-smolt. And with a higher MAB, we will have a production capacity and target for 28,800 tons in 12 plus 1 pool. And the main reason why we're now investing in this system is that it will be installed underground, which means that it must be done now to avoid extensive work later. And when we have the pools below sea level and move the fish below the water into the pools, we can very easily move the fish from one pool to another. And the principle is to have higher water level in one pool and then use the gravity to move the water and the fish from one pool to another. And this is the easiest and fish-friendliest way to move fish, very similar to how you are moving the fish from one net pen to another net pen in the sea without wellboats. The result, it's much better flexibility, and we can move the fish more often and also we can have a much lower operational risk. Our MAB or our production volumes largely depends on how we can utilize our MAB permit. And with a better flexibility in the logistics system and a higher capacity of the flow-through in the pool, we can increase our MAB utilization from 86%, 88% to 90%, 93%. And as I mentioned in the previous slide, we will, of course, work in parallel to expand the existing permits. In sum, all of this enables a 20% increased production potential at Kvalnes, including our own fish and the fish we sell to traditional salmon farmers as post-smolt. In specific numbers, it means that we are increasing the production potential from 40,000 tons to 48,100 tons. And you can see the breakdown on the various build-out phases on this slide. And the Kvalnes business case has definitely become more attractive with these improvements. We have, during the previous updates, talked about Norwegian authorities proposed change to the regulation for land-based fish farming. And one of the proposal is a requirement for disinfection of seawater at water inlet. In our response to the authorities, we highlighted that there is a knowledge gap regarding the connection between fish welfare, biosecurity and the seawater's natural microbiological composition. And this must be addressed before the authorities implement functional requirements that will significantly influence how we produce fish on land. We also highlighted that a one-size-fits-all approach to disinfection of inlet water is unnecessary, because prevention of infection to surrounding aquaculture facilities is already safeguarded by current distance requirements between land-based facilities discharge points and surrounding facilities. Hence, it is our view that more knowledge about effects and impacts must be obtained before a general disinfection requirement is introduced. And this applies to treatment of both inlet and outlet water. However, we cannot risk putting us and our shareholders in a position where we must rebuild the facility at a later stage to accommodate for potential disinfection requirements. So we have, therefore, proactively upgraded all 12 Phase 1 and Phase 2 pools, which includes treatment chambers for both inlet and outlet waters, and as well as significantly reinforces the pool concrete structure. And you did see the dimension of the picture earlier when Jostein showed you the slides on the construction. As such, Andfjord will be fully prepared to retrofit water treatment equipment in case future water cleaning requirements. So over to Bjarne and the financial details.

Thank you, Martin. First, the Q4 financial figures was made public 2 weeks ago in connection with the capital increase we did. So today's presentation will be focused on the financing of the construction steps. And for those of you who would like to go into details about the Q4, these are included in the appendix to the presentation. The investment in step 2a at Kvalnes is now fully financed with a combination of equity, bank loan and sale leaseback of the harbor. This also includes CapEx related to the improvements in the project that Martin presented. And these improvements leads to significant increase in the production capacity at Kvalnes. When the Kvalnes site is fully built out, the production capacity will be 48,000 tons. This is an increase of 20% from the previous presented 40,000 tons. And as a result of the increased production capacity, the CapEx per kilo is also reduced to NOK 105 per kilo. When we first launched the build-out at Kvalnes close to 2 years ago, we presented a 5-step plan for the complete build-out of Kvalnes. And the construction project that is now ongoing that Jostein gave details about with 12 new pools is step 1 and 2 of this plan. Step 1 is 4 new pools ready for production this year. This also includes infrastructure for the area such as the harbor area and the waterways, both supporting the entire Kvalnes site for the full capacity and also rock pits for the 12 first pools. So all the blasting work for step 1 and 2 will be complete during this step 1 and before we start operations. Then step 2a includes additional 4 pools ready next year in 2026, and the step 2 will be complete in '27 with 12 new pools, 13 in total. And then the production capacity will be close to 24,000 tons with the current license, and with an increased license, the actual capacity of the facility will be close to 29,000 tons yearly production. So we have now financed step 1 and step 2a of this plan. And when this is complete during next year, the production capacity will be 17,000 tons yearly production. And the capacity of 17,000 tons on step 1 and 2a is an increase of 4,000 tons from the previous communicated capacity, and this is a result of the improvements in the project that we've done. So the CapEx related to the improvements in step 2a is NOK 350 million, and the output from this investment is an increased production capacity of 4,000 tons yearly production. So if we assume an EBITDA of around NOK 50 per kilo, then the additional production capacity of 4,000 tons will give NOK 200 million in yearly EBITDA -- increased yearly EBITDA. So the payback time of the extra investment is below 2 years. So this is based on an assumption of OpEx of around NOK 48 per kilo on an EBITDA level. And if we then assume sales price around NOK 98 per kilo, so this will give that calculation. So it's a highly profitable investment to do these improvements, have this extra investment and get the extra output. The financing of step 2a includes a new bank loan of NOK 400 million. This is a construction loan and it's given by the same bank syndicate that we have already on step 1. So it's SpareBank 1 Nord-Norge as a lead bank in a syndicate together with SpareBank 1 Sør-Norge and SpareBank 1 SMN and also Eksfin is included in the bank syndicate. And the new loan is NOK 400 million as a construction loan. This is on the same structure and the same terms as the previous loan. So this is a construction loan that will be converted into a term loan when the construction period is over. And after that, we will have a 2 years amortization holiday before we have a repayment profile of 12 years, when we start paying installments. We also do a sale leaseback of the harbor. I will get back to the details, but this also affects the bank loan. So when the step 2a is complete, the total bank debt will be NOK 1.1 billion. So we will use NOK 200 million from the sale of the harbor to repay bank loan from step 1. So that will reduce -- initially, we had NOK 900 million in bank loan and a new construction loan of NOK 400 million, that is NOK 1.3 billion, but then we pay back NOK 200 million. So it will result in total debt of NOK 1.1 billion after step 2a. So we sell the harbor to Asset Buyout Partners for NOK 400 million, and we lease it back on an 80-year contract at 7.5% yield adjusted for CPI. So this is a transaction that makes sense for Andfjord Salmon. The harbor is an important asset. We need a protected harbor to have undisturbed transport of fish into the facility, out of the facility. We will also transport feed by boat when the volumes start to get high enough. In the beginning, we will have received feed by car, but with high volumes, we are also dependent on boat transport for feed, and to also use boat transport to transport organic waste out of the facility. So this is an important asset, but it's not an asset we need to own. So to sell this and to make sure we have the operational control of the harbor is a transaction that makes sense, and it also contributes with NOK 200 million to the financing. So we used NOK 200 million to pay back loan and the remaining NOK 200 million is a contribution to the financing for step 2a. So the CapEx of construction of step 2a is NOK 1.150 billion in total. This includes the improvements in concrete reinforcement, also technical infrastructure related to water flow and fish logistics. And in addition to the CapEx, we also have operational equipment that we have also financed now amounting to around NOK 200 million in total. So the total financing is NOK 1.350 billion. And then the financing consists of the equity raise that we did 2 weeks ago, NOK 600 million, the new construction loan from the banks of NOK 400 million, and the contribution from the harbor financing of NOK 200 million. And in addition to that, a lease financing for equipment that is suitable for leasing of NOK 175 million. So that is the total financing package for step 2a, also then including operational equipment. And the capital raise that we did, now 2 weeks ago, once again demonstrated the strong and supportive shareholder group that Andfjord Salmon has. So it's been important for the company during the last couple of years to attract industrial investors to have the right composition of owners that also can contribute with financing, but also with more than financing. And we succeeded quite well with that. The largest shareholder, Jerónimo Martins, large retailer based in Portugal and with operations in several countries, especially in Poland, Portugal and Colombia. They first invested in Andfjord Salmon in 2022, been present in the Board since, and really made a big contribution to the development of the company. So with money, of course, financing is important, but also with more than that, it's been a really good story with the cooperation with them. And this is, of course, a large system. Their revenues in 2024 were above EUR 33 billion. And their contribution to the capital increase that we did now was NOK 226 million, and their ownership share will be at 30% when the transaction is complete. We're also really pleased to have High Liner Foods as one of our main shareholders. High Liner is based in Canada and a processor and distributor of seafood in the North American market. Their motivation for investing in Andfjord is exploring opportunities related to distribution of Andfjord Salmon products and also to explore other opportunities together. And they also contributed strongly now in the capital raise with NOK 114 million, and their ownership share will be 8.1% when the transaction is complete. It's also worth mentioning, Eidsfjord Sjøfarm. Large conventional sea-based farmer in the same region where Andfjord Salmon is located, part of the Holmøy Group. They produce 30,000 tons of salmon each year. So it's a big salmon producer. And their motivation for being a shareholder in Andfjord is operational cooperation. There are several opportunities that we can cooperate for the benefit of both parties. For example, Andfjord Salmon will buy smolt from Eidsfjord Sjøfarm. Eidsfjord Sjøfarm will buy post-smolt from Andfjord to release into their sea-based facilities. And they have also built a brand-new slaughterhouse that Andfjord will use for the next harvest. So a lot of opportunities, and they will maintain an ownership share of above 4% after this transaction. So with that, I'll leave the word back to Martin for a summary and outlook.

Thank you very much. Kvalnes Phase 1 is on track. We have developed a solution to increase production capacity with 20%. We have initiated the construction of Phase 2a. Financially, we are in a very good position with private placements, sale and leaseback and a bank loan of total NOK 1.4 billion. And we are on track to start the smolt release in the third quarter. And then we are ready for the Q&A, and you can ask questions here in the audience or you can submit questions through our webcast solution.

Thank you, Martin. Any questions from the audience? If not -- please raise your hand. I saw someone here.

Christian Nordby, Arctic Securities. Can you comment a bit on how you think about the EBITDA per kilo on post-smolt versus full grown salmon?

Yes. If you assume that you have an unlimited market for post-smolt, that will be highly profitable. So the EBITDA per kilo will be slightly higher for post-smolt. Of course, for human grade, you will have a great market. You can access the world markets. And in that sense, it's a more secure and lower risk related to that. But for Andfjord, with agreements with sea-based farmers, where we agree on volumes, the post-smolt will have a good profitability. It's also important that these cooperations that we will have is for the benefit of both parties. So sort of 2 plus 2 should be 5. So that's the aim for that cooperation. But isolated, post-smolt will be very profitable.

So the way I understand, is it fair to assume the similar EBITDA per kilo on both?

Yes, that would be fair, yes.

[indiscernible] post-smolt. And it's also very beneficial for us to have this as a supplement to the human grade. So for us, the best way to have this in our concept is like to have a balanced solution and a long-term partnership together with strong seafood salmon farmers.

We'll do a question from the webcast. A question for you, Bjarne. Are the terms on the new construction loan same as on the loan related to Phase 1?

Yes. It's same terms and same structure as we had on the Phase 1. So as I also mentioned in the presentation. So yes.

Simon Brun, ABG Sundal Collier. On the incremental volumes from the design improvements on Phase -- well, related to both Phase 1 and 2. How is the split between post-smolt and sort of like full grade for human consumption? And is the incremental volumes driven by sort of like the optimized setup allowing for more fish? Or is it higher densities? Or is it a combination?

Yes. It's a combination. You have a better flexibility to release more smolt into the pool, and you can have a better utilization of the pool capacity when you are splitting the fish and dividing the production cycle into more cycles. So I think this demonstrates how we can utilize the pool capacity better. And the post-smolt is, of course, a supplement, because you can split the fish in -- part of the batch into the sea. But with this new system, we can have more splitting of the fish divided more often into other pools. We often like to -- if you want to put this system into perspective and production planning is what you like about like playing Tetris. It's different pieces put together into a good plan. And this is what our system is giving us. It's a tool to really put the pieces in the right place. But also higher water -- when it comes to capacity, it's all about space for the salmon and also enough water too. And this enables us to have much higher also water consumption through the pools, which also gave us better flexibility in the peak density.

It's also about the composition of human grade and post-smolt. And of course, human grade is the main strategy. So the post-molt is to add further flexibility and to utilize the capacity in the pool. So it will be a stable share of the production around maybe 20%, but the main part will be, of course, still human grade.

Thank you. Question for you, Jostein. On the photos, you saw there was a gap between the wall elements. How do you prepare to close the gap between the wall elements?

The solution that you put together is really that you -- as maybe all of you saw, 50 meters high, and the precision about the sizes there, you will actually put concrete in between first and then you put a solution tightening or adding the -- it's a Sikaflex solution that you're putting in between, making sure that you won't have any water going into the outside of the pool. So that is a traditional conventional solution that we would use to add that on.

Question to you, Martin. When do you plan on expanding with Phase 2b?

We will come back on the specific timing for when we will start on Phase 2b. But as we see now, we see the benefit to see the project as one since we have the concrete factory here, we have all the personnel from our supplier. But we will come back on the exact timing for finalizing the Phase 2b.

Another question. Will blasting of Phase 3, and this is even further into the future, interrupt production in Phase 2 when you get there?

No. Currently, no. There are no indications that the blasting of neither the tunnels or the pool pits, that will affect the production or the ongoing production of salmon in the first phase of the project.

Yes. If you look at the dimensions there, this is -- the length from the first pool to the last one is around 400 meters. So it's over 500 meters to the next phase. And the main reason why I wanted to have -- didn't want to have the biology in the first pool combined with this is because the tunnel is going below ground here. And we have had extensive monitoring of the blasting, both when it comes to sound and vibrations, how this is impacting the fish. So we're very confident that we can have a very good progress on Phase 3 in parallel with the production.

Question about fish density. What fish density do you plan for in your current plan? And in the longer term, what is the potential optimal density?

Yes. If you look at the optimal density, I think you have two perspectives. The first and the most important one is, of course, the fish welfare, and then you have the economical perspective. And when we have said that we earlier had a peak at 40 kilo per cubic, this is very conservative and it's half of what other land-based is targeting. So we have the flexibility to have much higher capacity. But in the ramp-up plan, we will go from 30 to 40 kilo per cubic. And we had the flexibility to have it well above and the same target as the other salmon farmers on land. And if you look at other salmon farmers in Norway, they have very good numbers with these densities. So for us, it's very important to have the water flow, the space and the capacity to have the same peak density as others have. And we say that the sweet spot on the density, it's around from 25 to 35 cubic per kilo (sic) [ 25 to 35 kilo per cubic ] in our concept. It's not only because of the fish welfare. This is where we have the most optimal production plan.

There are a couple of questions about pools, the 4 first pools. At what point of time do you foresee that you will be able to have full operations for K1 to K4?

Yes. The intention is to have them all -- it is based on the production plan as well for how the operation plan, their production of salmon. But for sure, we intend to have both the pilot pool K0, K1 to K4 available throughout 2025.

And a question to you, Martin, about the production volumes. We have a couple of questions on that. How should we think about production volume in 2026? While we're looking at 8,000 tons capacity, it seems some of the analysts are factoring in production of 5,000 tons. What are your plans going forward?

Yes. It takes time to build up the biomass. So when we are starting to release the smolt in the third quarter of 2025, we will not reach 100% capacity in 2026, also because we need to have a long-term ramp-up plan. If we're releasing a lot of smolt now, this also will impact our long-term production plan. So we can have high volumes in 2026, but then we need to have a reduction in the volumes in 2027 and 2028. So the production volumes that the analysts, the 5,000 tons production target, it's roughly also -- this is where we estimate it to be in 2025, and it's a combination of human grade and post-smolt.

Question to you, Jostein. Will the planned pools north of the concrete factory have the same design as the Phase 1 and Phase 2 pools?

That has not yet been decided. I think that Andfjord would like to see how the production moves on for the first pools, then deciding what are the needs for pools in a future build-out.

Yes. I can elaborate on that comment. We see, of course, a very strong improvement in the production plan if we also have some smaller units, because we have very large units perfectly suited for the last phase of the production cycle. So to have smaller units, we will also increase our productivity and flexibility. And also the cost of building smaller pools, it's less complex and also have a lower investment. So definitely looking into having more and smaller units in the next phase. We will come back on these details after we have gained experience from the first phase.

Any questions from the audience? Yes.

What will be the working capital requirements for the first phase of production?

Yes. I think we need to get back to the exact figures for that. As Martin mentioned, it is fair to assume production of around 5,000 tons next year. And as I also mentioned, we can expect an OpEx around NOK 50 in total per kilo. So you can calculate the buildup of the biomass, but I don't think I can go into exact details. It's a bit too early for that yet.

And when will you start holding quarterly presentations up at site at Andøya?

Yes. When we have fish in the pools, yes.

And of course, everybody is welcome to visit.

Yes, please. It's a very good idea to visit us actually before we are getting fish in the pool, because to understand the dimension, you need to be down in the tunnels, you need to be down in the pools, and that's difficult after it is water there. But it's quite impressing to see. The longest tunnel in our region is actually at Andøya now. So you're all welcome to visit.

We have one more question from the webcast. If the regulatory changes go ahead, I think it means by disinfection of seawater, how would this raise CapEx per kilo to be able to satisfy those disinfection requirements?

I think this is a hypothetic question. So this is why, for us, the most important thing now is to focus on having the flexibility to adapt new cleaning technology. And our license, the existing license that we have, and the authorities are also clear that the new function will not impact existing license. So if requirements come from the authorities, we will come back on the details on the coming license expansion on the sites.

Any questions from the audience? We have one final question then from the webcast. Are there any risks regarding the sale leaseback of the harbor? I guess that's to you, Bjarne?

Yes, it's 80 years contract, as I mentioned. And it's important for Andfjord to control the harbor, as I said. So we need to have the operational control of the harbor. We don't have to own the harbor. So in terms of risk, we don't see any change to that compared to owning the harbor. So through these agreements, we have secured the necessary control that we need for our operations.

Okay. No further questions from the audience? And we can conclude.

Okay. Thank you very much for your attention.