Hello, everyone, and welcome to the Q3 of 2023 Operational Update presentation. I'm Johan Andreassen, and with me today, as always, Karl Øyehaug.
Good afternoon. We will open up for a Q&A after the presentation, so you can type your question in the Q&A tab here in the teams live window. We will only answer questions from attendees that have identified themselves with name, so please do state your name. Johan?
Thank you, Karl. Before we get started with the update itself, I would like to share a few personal comments about my recent decision to step down as CEO. I have been involved with the company since we established back in April of 2010, and I held the role as chairman from that time until May of this year. In addition, I took the CEO position in 2016, where we were gearing up to start construction here in Miami on a tomato field. This has been a long and challenging journey, as you all can imagine, and for various reasons, more challenging than expected. It has cost a lot to stand in the storm during this long period, and I've been reflecting for a while to gear down, to think more about my family, health, and other companies that I'm involved with.
Last week, I had a meeting with the chairman, and I discussed this topic, and we concluded that now is a good time for me to make the move. The farm now, for the first time ever, is in a stage where we have a fair chance to be measured on production KPIs for the period ahead of us, and the crazy period of getting out of the ground is finally coming to an end. For the coming phases, I believe the company is better served with a different CEO profile, as the focus will be more on industrialization and day-to-day operations. The process of finding my successor will likely take some time, and I will still lead the company as CEO for the quarters to come.
But I will also take part in finding my successor and deliver the company over to that person in the best possible way. I have to say, I'm highly motivated to go into this period ahead, where I believe we will see lots of positive developments in our production KPIs and a significant increase in production and harvest volumes. That being said, I will now give you an update on the latest developments, but for context, I will start with a recap of the year so far. The year 2023 can be split into four parts. The first four months of the year were characterized with heavy infrastructure upgrades and operational improvements, requiring production to be put on hold while work was ongoing. Positively, this work set the stage for a good and safe production environment thereafter.
From May and June, we were finally able to return to normal production. We did see stable conditions and low mortality and high growth. Most importantly, feeding and biomass gain in this period was in line with budget. The per-performance supported that the system upgrades and operational improvements had the intended positive effects. However, in Q3, we unfortunately faced severe temperature-related challenges tied to us having too little chiller capacity to maintain the desired temperatures for our fish. This resulted in slower growth and restricted feeding, effectively pushing the ramp up in harvest volumes and the revenue out in time. Positively, the under-dimensioning of the chiller capacity is now fixed, and I'm pleased to report that the temperatures have been brought down to the desired levels. This has stabilized the production environment and is expected to lead to gradually improving biological performance.
As announced, we ended up harvesting approximately 365 tons HOG in Q3. In Q4, we expect to harvest approximately 300 tons HOG. This is lower than guided earlier because we, after thorough evaluation, have decided to move fish that was planned to be harvested in Q4 over to Q1, as we have space in the farm, and we believe the fish has growth potential, despite not having grown as much as we hoped for during the third quarter. Finally, we are taking additional steps towards strengthening the organization, notably, the recent appointment of Mario Palma as our Chief Operating Officer. Mario, who is a Chilean citizen, is a structured RAS expert, with over 14 years of experience working with RAS. The last six years in Atlantic Sapphire.
For personal reasons, Mario has not been able to live in Miami for the last couple of years, but we are happy that he's now able to move permanently to Miami and take this critical role as we move forward into industrialization of the Bluehouse. I will work closely with Mario in the period to come to help him succeed in his new role. In Q3, the temperature-related challenges resulted in slower growth and significantly higher feed conversion, with a net biomass gain of approximately 100 tons round living weight. The standing biomass at the end of the quarter was approximately 2,350 tons round living weight.
The initial increase in temperatures resulted in a gradual reduction in water quality as the volume of new 26 degrees Celsius makeup water was reduced to minimize the cooling requirements, which again, negatively impacted our ability to feed the fish. The biomass is being monitored closely following the Q3 temperature issues, but we continue to expect a material uptick in biomass gain and harvest volumes, despite the higher share of the biomass showing signs of maturation now than in September. To give some more flavor on the impact of maturation, I want to say that even if a fish has started the maturation process, that doesn't mean that the fish stops growing or that it has to be sold as a pale, small, low-quality product.
The fish will grow until it reaches a certain egg size towards the end of the maturation process, and it will keep its flesh color until that stage. The growth, however, may be slower and come with a higher feed conversion than if the fish was not maturing at all. Our goal in the coming period is to get the fish to that is currently in the maturation process, big enough to harvest while still having retained the color to get the most money out of it. Since the temperature issue was resolved in October, the feeding has been trending up, driven by improved water quality. So I'm happy to say that the temperature issue is now finally resolved.
Yeah, the new, additional chiller, chillers have been installed as is, as guided earlier, and the temperatures has been brought down and stabilized at the targeted levels of around 14 degrees Celsius in our salt water systems, and even colder than that in the fresh water systems. The two graphs on the right-hand side of this slide show the temperature and feeding trends in the fresh water and salt water systems the last two months. This is clearly showing a nice gradual decline in temperatures over the last few weeks, while the feeding is gradually ramping up. As we speak, we see similar growth rates as we saw in the good period we had in May and June. Don't pay too much attention to the feeding trend in the fresh water system, that is, looks like it's going down.
We're actually intentionally holding back the fish there with low temperatures in order to create a better and stronger smolt for the growth phase. I also want to say that the impression of the farm and the tanks is much better fish behavior. The fish is chasing more the feed and is more active, and the water quality is better with less turbidity. I have to say that these observations are making everyone that works with fish here optimistic about the future. And finally, I can say we have good farming conditions. The recently installed heat exchanger or pre-cooler is now fully engaged, taking the intake water from the wells down from 26 degrees Celsius to approximately 14 degrees Celsius, allowing us to distribute large volumes of cold water across the farm, and to con...
And this is contributing a lot to the temperature stability that we see. The new chillers are proving to be very effective and reliable, even better than expected, and this is actually making an investment decision in the new phase one and two chiller plant likely before phase two is online. We believe what we have now is able to, in a safe and stable way, to carry the temperature of the existing Bluehouse for the foreseeable future. The daily feeding is currently around 20 tons, and I expect that to gradually increase over the next weeks and months as we are planning to harvest less than what we are producing, as we are taking an aim to reach steady state production early next year. With that, I will give the word to you, Karl.
Thank you, Johan. Moving over to our expectation, expectations going forward. In the second half of 2023, as you all know, the most critical task was getting temperatures down to intended levels. As explained by Johan, we believe we're currently seeing the start of the return to similar production KPIs as in May and June, supported by a gradual increase in feeding and biomass gain in the last couple of weeks. We expect to harvest around 700 tons in the second half of 2023, quite equally distributed between the third and fourth quarter. When it comes to price achievement, we expect a consistent price of around $12 per kilo, head-on gutted on our premium fish... while the average price achievement in Q4, specifically, is expected to be in line with the third quarter, right above $7 per kilo.
Looking into 2024, we expect to reach our full budgeted levels of standing biomass in phase one, which will trigger a material ramp-up of harvest volumes. We were expecting Q4 2023 to be a stepping stone towards high harvest volumes in 2024, but as Johan explained, with the current biomass situation, we are holding back on harvest until we get into next year, which consequently will make the increase in harvest volumes larger then. This material ramp-up in harvest volumes means higher revenue, which we expect will significantly reduce the cash burn compared to what we've seen in 2023. The company continues to expect EBITDA breakeven towards the middle of next year, but once again, subject to the biological performance returning to the same levels as seen back in June.
The reason we are repeatedly adding this disclaimer on biological performance is that there is a particularly large range of possible outcomes in biological performance compared to what we'd normally expect after the fish has been through challenging conditions in the third quarter. We will learn more about the growth potential in the fish over the next weeks and months, with actual growth performance in targeted water temperature, and will, of course, continue to update you all on this going forward. In conclusion, the infrastructure improvements and the recent increase in chiller capacity is expected to result in EBITDA breakeven. Jumping over to offtake, our Bluehouse branded fish continues to be sold in approximately 2,000 retail locations across North America.
In Q3, the premium price was flat quarter-over-quarter, at $11.4 per kilo, while we achieved an average price for all the harvested fish of $7.2. Price achievement in Q3 was affected by production setbacks, with a higher share of downgrades ex- harvested, especially a quite large share of small fish that doesn't meet the requirements of our retail programs, and therefore was sold in commodity markets at lower prices. To remind everyone, under stable conditions, 80%-90% of total harvest is expected to be sold at the Bluehouse premium price, which will raise the average price achievement considerably. Long term, we're targeting around $12 per kilo in average price achievement.
We continue to see good development of branded sales and programs for the premium quality product, while we also focus on new value-added and convenience product lines, such as our smoked salmon products. To conclude the presentation, we'd like to give you a refresher on the unique business case that Atlantic Sapphire has built up over the last years, spearheaded by Johan. First, Atlantic Sapphire is capturing a U.S. mega trend. The U.S. is by far the largest salmon market in the world. However, U.S. production is scarce, with consumers generally reliant on salmon imports, an issue that we are addressing. Secondly, we have the world's largest land-based facility already operational and are approaching EBITDA breakeven. After around three years of commissioning and significant operational improvements completed, we expect the facility to deliver profits next year.
Third, we have our phase two under development and have invested more than $100 million so far into the project. Once complete, total production capacity will be around 25,000 tons head-on gutted, offering significant economies of scale. To finance, we have an undrawn term loan of $100 million with DNB. Fourth, we have a proven ability to extract U.S. premium pricing for superior grade fish, while benefiting from significant cost savings by removing the need for air freight, as well as a reduction in the CO2 footprint. The fish, as mentioned earlier, is currently being sold at around 2,000 stores in the U.S.A. And finally, the company is backed by highly renowned financial and industry experts. With over $600 million of equity invested since inception, Atlantic Sapphire has strong supporters, both in the equity and debt markets.
For example, leading salmon farmer Mowi is showing continued operational and financial support in their active role as the largest shareholder of the company. So with that, I'd like to thank you for your attention and open up for Q&A. So, I'll just repeat that, we will receive questions in the Q&A tab here inside the Teams window. So if you have a question, then please state your name and post your question, and then we'll answer them. So we'll give everyone a minute to post any questions you may have. So far, we don't see any questions that have come in, but I guess we can give it another half minute in case someone is in the process of typing it.
Yep. Seems like the messaging was clear, Karl.
Seems like that, then, we can, as always, also repeat that, of course, feel free to reach out to Johan or myself with any questions that may pop up later. So, always available. Well, it looks like, we're not seeing any questions. So I think, with that, we'll just say thank you for everyone's attention, and I'll give the word back to Johan for any concluding remarks that you may have.
Right. Well, thank you, Karl. Thank you for everyone listening in today, and as I mentioned earlier, I think we have a very exciting period ahead of us the next few months. It's really looking good in the farm right now, and yeah, I'm excited to keep you guys updated the next time. So have a good rest of the day, and take care.