Everyone, welcome to this, third quarter presentation by Nordic Aqua Partners. With us today, we have, Chairman Ragnar Joensen, CEO Ove Nodland, and CFO Hjalti Hvítklett who will present the results, for everyone here. If you have any questions, please feel free to post them in writing here in the app. I will write them out to the management team afterwards. With that, I'll give the word to you, Ragnar.
Thank you so much, Charlotte, and welcome everyone for the Q3 presentation of Nordic Aqua Partners. Today we will go through highlights, project review, market, some assumptions, financials, and we'll end with outlook and summaries. If we start with the highlights. Things are going as planned. Project is on budget and on time in stage one. As we have said before, the CapEx is fixed for stage one, there are no surprises there. Biology is going well. We have now fish averaged with 50 grams in the first batch. We have installed RAS 3, that's completed, and we are working on now RAS 4, 5 and 6. There are nine in total, we are getting closer.
Salmon prices in China are still very strong, supporting the business opportunity. If we look at how much we have spent in CapEx in this quarter, it's DKK 51 million. We're up in total now 238 out of the 370. Liquidity is also as planned on 379, and that is including cash and undrawn credit facilities. If we have a look again at our company. Where are we located is south of Shanghai and very good access to a strong base of consumers. The project is fully funded to reach 4,000 tons, and we have the equity in place for the 8,000 tons production. Our plan is still to increase up to 20,000 tons.
On the site, we have an ambition to be able to produce 50,000 tons. Stage one has commenced, and first harvest is still expected to be at around March or in the Q1 2024. Management team is strong. We will just come into that again later in the presentation. We also still have the dedicated support from the government, local government. We have very strong industrial players with us in the both AKVA group and Nutreco, both on the supply side and as investors. Those were the highlights and I will now give the word to Ove Nodland, our CEO in China, to give us a project review. Please, Ove.
Thank you, Ragnar, good morning to all from China. I'll just start by giving you all an update. As we have heard, the project continues on budget and on plan. The installation of RAS 3 was completed on schedule, the fish was moved into RAS 3 in November. Installation of RAS 4, which you can see at the upper left corner of the blue rectangle, is also proceeding as planned with moving salmon from RAS 3 into RAS 4 in January. You can also see in the picture that the construction process of RAS 4, 5, 6, 7 is well in process according to schedule. The COVID situation in China is still luring in the background, we plan well.
We've got all the equipment to site on time, and we have us, our operational team on site. There has been no impact due to COVID-19. Thank you. If I can have then the next picture, please. This is a more close up to see the progress. You can see the building in the back behind the white rectangle. It is the building we have always referred to as a small building. The hatchery RAS 1, 2, 3 is not only completed, but there are fish in all systems. We will relocate our offices and administration towards the end of this year. You can also see that the roof on the big building is starting to be installed over RAS 4 and RAS 5.
Aqua is in full swing with the installation of the process equipment. In the front of RAS 5, you have RAS 6. You can see all the concrete filters, tanks and also fish tanks are completed. RAS 7 is quite advanced as well, with three of the tanks already casted. Of course, in the front right you have RAS 8 and in the back RAS 9, and then the process equipment. Once again, things are going according to plan and schedule. Next one, please. We have always said that things moves very fast in China. This is a picture from August and then November. It's about three or four months. It's quite visual what has happened since our record in August.
Up till August, it was mainly below ground and building the foundation. But now as we saw in the previous picture, it's really now taking shape. The emergency generators and transformers are already installed in the building to the bottom left. And again, the orange rectangular to the right of the blue is the area for next step, the next 4,000 tons. And you can see that that has now been completely backfilled. So we are proceeding with construction and installation of the RAS equipment as planned and on time. I think it's back to you, Ragnar, now.
Thank you. Also on the organization side, I mean, we have been recruiting and training additional local farmers, so they are now up in eight farming operators together with the five that you can see in the picture. Myself, with experience from farming and both the assistant farm manager and the farm manager have also extensive experience. RAS salmon expert that we have in place also. During this quarter, we also had the addition of the Fish Health Manager, Alejandro Millar from Chile.
We have just added also some of the reference projects that we have been working on, both the post-smolt facilities, Moby, that Johan, the RAS expert and myself built and finalized in 2017, and Tytlandsvik Aqua, which I have been quite active also in Norway, where we also produce large post-smolts. These have been in operation for four years now and have been producing as much as we're going to produce in phase one for Chinese projects, so the similar size project. If we look at our side, what is now, all we mentioned, we have already fish in the hatchery, RAS 1, 2, and 3.
The first batch came in in March this year, and that fish is now 50 grams. Second batch came in in June, and that fish is just about 10 grams now. Then we have batch three that is just about to be moved from the hatchery into the start feeding. Our fourth batch will come in in December. Now I'll see if it works, just show a small video clip of the fish when they were moved from RAS 2 into RAS 3. With the video clips, sometimes you can see them very clearly. I see them on my screen. Hope you did also. The fish are alive and very well.
If we look at how they have performed growth-wise, you can see now a graph or two graphs on the left. That is batch one. On the right, that is batch two. For both of them, we had a gray line of expected growth, and then we have a dark blue line with the actual growth. You can see in batch one, fish have grown better than budget, and the same with batch two. Actually, we were thinking that the batch one, since they are the, like, we call them the front soldiers, they are the one experiences the first fish in each of the new departments that we put them into. Even though they are front soldiers, they have been performing very well.
If we take mortality-wise, we are also ahead of budget. Things are developing very well for us. Of course, the fish are small still. They are 50 grams, we need to get them up to 5 kilo. The plan is to get there in Q1 2024. Just a few words also about the facility. You could see the pictures from before. You can see that in the small building, you have RAS 1, 2, and 3, and then in the big building, 4, 5, 6, 7, 8, and then the perchy and the processing. This is how the facility looks like.
We look at what is it that we have focused on when we have designed these facilities, because we have built so many before, we have focused on clean water. That is the primary focus area for us, to have clean water. Where the water intake, when it comes in, it is extremely well cleaned. Within the systems, we are having extreme focus also on having very, very clean water. That means extra mechanical filtration, very good particle removal also in the, in the biofilters, with thick biofilters and so on. That is our main focus. Water temperature. At the moment, we are running with quite low water temperatures.
Since the fish is growing so well, we're just adjusting a little bit with the temperature, but we have sufficient cooling capacity to reach levels that are well suited for the Atlantic salmon. We have also been running with the low salinities throughout the process, all just to create the best environment for the fish. If we go to the timeline, we said that we put our first eggs in Q1 2022. That means two years later in Q1 2024, that's when we're going to have our first harvest. Then we have these further stages, stage two and stage three, taking the production from four first up to eight and then up to 20,000 tons.
The plan has been to start with the laying in eggs in 2024 for the 8,000 tons. We have also mentioned before that, the 20,000 tons, we would like to start simultaneously, or it will be postponed. We're just looking for it. If when we go for the 20,000 tons, we need to have extra capital and equity. For the 8,000 tons, it's sufficient to have an additional loan in order to reach that. We will come back to that at later presentations exactly how the plans are going to be developed from the current four up to, up to the 20,000 tons. If we, if you could take us through the market also, please.
Yes. The demand for Atlantic salmon in China continues to grow. To the left you will see the export of Norwegian salmon to China in tons. The majority of the salmon in currently imported to China comes from Norway. The current market was approximately 80,000 tons in 2021. That is a little bit less than one would expect for or had planned for in 2021, but that is because of the COVID-19 setbacks in 2020 and 2021. Again, we will reach 216 tons in 2030 with a calculated growth of 12%. The demand is very much driven by the shifting of buying pattern from the previous Horeca market, which was the major.
It still is the major, but we see a much bigger growth in online shopping and home deliveries to consumers. One also have to bear in mind that 15 years ago, salmon as such was very uncommon in China. Now it's more used in the typical Chinese kitchen. Next one, please. This, of course, is a very interesting graph. We have put a period here of about 18 months, where you can see the development of the price for Oslo and also as it ends up at the right side of the borderline in China after customs. The bottom one, the thick blue is FOB Oslo prices of the periods.
The light blue is the additional cost to get the salmon ready for export to China. Majority of that is special packaging, mostly related to the COVID-19 restrictions. We have a light orange one, which adds the freight cost, which are currently around NOK 35 per kilo. The distance from the light orange to the dark orange or thick orange is the 8% input duty and calculated NOK 7 per kilo for handling the salmon after landing in China through customs and into a cold storage. In principle, you could say that the thick orange line indicates the absolute lowest cost to have imported salmon duty paid and in a cold storage facility on the right side of the custom border. Next, please.
This, of course, it's quite important and interesting to look at. We see a continuous high price in China for various reason, but it's still stable at high levels. You can see the gray field and below the thick blue line. The thick blue line indicates our current EBIT cost per kilo of NOK 57 for 4 tons. Of course, the implied EBIT margin, which again is quite interesting and positive for the project. The average wholesale prices in China are somewhat higher than the thick orange. As you remember from the previous slides, it is more like how the minimum cost to get it into a cold storage on the right side of the custom border. There are some additional costs.
Actually, our first line buyers are paying somewhat higher than this. We also see that, for instance, the salmon fillet sold at the high-end markets is up to NOK 500+ per kilo. Even if the wholesale prices are high, the price to the end user is significantly highest. There is an interesting margin on top of that. We are approached by quite a lot of companies in China who wants to sell our salmon on long-term agreement. I think one of the reason, of course, is that we are the first one able to provide locally farmed salmon, but our ability to deliver 24/7 obviously add to it. As I mentioned before, the change in buying patterns towards online shopping and home deliveries make us even more interesting.
We have decided to not enter into final closing discussion with these parties because we want to
Continue to understand and negotiate, but we will be in position with contracts when in due time prior to our first harvest in Q1 2024. Thank you. I think that was the last one on my...
Thank you, Ove. Thank you, Ove. Just to look at some of the KPIs that we have been discussing before, I mean, if we take the three groups that we have, we have the CapEx, but the CapEx is divided in two. We lease a building from the Chinese government. They're building for us, so we have a fixed price leasing contract with these. There have been no changes since the IPO. That means for the last two years, there's been no changes. If we look at the RAS technology contract we have with AKVA group, there are also no surprises because it's a fixed price contract. When it comes to production costs, most of the production costs remain exactly the same area that it was before.
We can see that feed prices have increased, and they have continued to increase over the past, especially past year. And that means that we have been, it has been necessary for us to adjust on the production costs. I will give you a table just after. If we go to the further stages that we're going to build, so the lease, once we come up to the 20,000 tons, we need a new lease agreement with the Chinese government. We are ongoing with the negotiations, and it's going well, but we can see that there might be a change in the costs, but nothing significant to the project.
The same with the RAS technology, and that is for the next phase, next stages, so stage two and three . We have started discussions with the AKVA group just to plan for the development. Of course, we have seen in many other RAS projects that costs have increased, and that will be the same for us. We have two advantages compared with the first stage, and that is that we are going to be very standardized for the next stages. That gives a little bit decreased cost in CapEx. Also by adding how much is purchased in China locally, we can also decrease the cost. We will not have full effect of the inflation. It will be slightly smaller than the inflation level that has been seen.
If we take first a look at the production costs, we have previously said that we could come in at lower levels than NOK 57 per kilo for the first stage, around NOK 50. We try to illustrate with this graph that it has been on the feed price. We started off with having feed price levels, this is on the HOG level. When we have fish on HOG, how much has the feed been part of the cost? They are now landed at 24 NOK per kilo. Previously, we have been down to NOK 17, NOK 18, NOK 19 at that area. It has been increased. That is the main change that we have.
Once we have the scale effect of taking the production up to 20,000 tons, we can see that the price will decrease down to the level around NOK 51. Of course, we have energy also, and energy prices are very stable in China, so there's been no change there. They are at the level of NOK 0.75 per kWh. It's an okay electricity price and very stable. It's been stable for the past 10-15 years. So all in all, when we sum it, you can see, and you can probably have a read afterwards if you want. CapEx is going slightly up, as we have mentioned.
Lease is going up per square meter, per kilo it will be going down because we can utilize the square meters better. Finally, the EBIT costs NOK 57 in stage one and down to NOK 51 in stage one when we open 20,000 tons. We have previously mentioned that once we are producing and looking at production capacity, we have set our production capacity at site to 127 kilo live weight per cubic meter of tank volume. This is the level that many farmers have shown that it's fully possible to produce. It is possible also to go up. We can see that from other numbers that it is possible to produce more.
We have been a bit conservative on how much we expect to produce out of each cubic meter tank volume. If we said that we could produce more, for example, 150 kilo, then stage two will not be 8,000, but rather 10,000 tons in that area. That will also decrease the costs, production cost per kilo with around NOK 4 . I will now give the word to our CFO, Hjalti, who will take us through the financials. Please, Hjalti.
Thank you, Ragnar. Start off with, the project financial. As we have mentioned, we have a fixed, price contract, so CapEx is still on the same. We have, on the right side, we see the payments, for each quarter that have been, and the dark blue is the quarters, that are coming with the payments. CapEx still, as I said, remains on budget. We have this, lease, agreement with the government, That, is fixed also for the first stage, and that, we don't have to capitalize money for it to invest in the facilities, only in the technology. We have, an annual lease of, NOK 18 million for the first stage.
If you look at the sources and funds for the first stage, this is up till the first harvest in the first quarter of 2024. We have secured debt of NOK 300 million, raised equity, and we have also capitalized lease the government. Just about NOK 1 billion in total financing. The funds, uses of funds is CapEx, about NOK 500 million, and the lease agreement. The working capital, which is mainly the biomass, it's NOK 91 million. Financing and general expenses are NOK 164 million. That we will remain with a buffer just before the first harvest on NOK 122 million. If you look at what has been paid and where are we today, we are 2/3s of the CapEx is paid for and installed.
Land and infrastructure is secured. We are starting on the biomass, a part of the working capital is also invested. The financing and general expenses is also around two-thirds of the budget until first harvest in 2024. A buffer on NOK 120 million. Profit and loss. It's according to plan. We have, of course, higher personal expenses, that's driven by increased productions. Financial expenses are still on mainly on the commitment fee on the EUR 24 million loan from Eksfin. We have a positive exchange rate deviation this year, we expect still DKK 30 million-35 million loss this year. That of course depends on the exchange rate deviations end of the year. Cash flow is also according to our plan and budget.
We have paid in this quarter DKK 51 million in third quarter for CapEx. We expect the first utilization of the loan to be within a month, and we have a net change in cash of DKK 51 million. We come to available liquidity of DKK 379 million. That is cash, DKK 156 million. We have a working capital for DKK 37 million, equivalent to RMB 35 million in the local bank in China, and a loan for EUR 25 million at Eksfin. That in total is DKK 379 million that we have in available liquidity. Financial position. We have the total assets are DKK 412 million. Cash, as I mentioned, is DKK 156 million.
The biomass is now just below DKK 4 million, which at the point, at the time of end September was around 4 tons, and now today is around 16-17 tons. As Ragnar also mentioned previously, we have the equity in place to reach phase two, but need additional loan. Thank you. Back to Ragnar.
Thank you, Hjalti. Yeah, just to touch upon again, the green profile that we are trying to work into the project. If we look at some of the parameters, we are working on, GLOBALG.A.P., certification and also ASC certification. That's the level that we want to be at, and that will be once we are up at the harvest point or just after then, we will go for these two certifications. Fresh water, we have mentioned before also. Fresh water is a scarce resource in China, difficult to get hold of. Therefore, we decided to produce our own fresh water. Renewable energy. We have the roof covered with solar panels. It will be as soon as the facility is finished.
That will cover 20%-25% of the energy consumption. In addition to that, on the island that we are at, there is a big solar power plant and windmill power plant that we are sourcing our energy from. Our energy will be very green when it comes into the facility. As fertilizers, we can use all the outlet or the effluent that's cleaned, and we can use that for fertilizers in the neighboring area. Of course, since we're producing locally in China, we don't need air transportation to reach the market. We have been working closely both with government and also local neighbors to have a good relationship. Just to sum up, project is on time and budget. Equipment is being installed and going well.
The biology is also doing well, low mortality and high growth compared to what we have set up. The setup is experience from a long time in the business. We are further building the organization. Salmon prices are very strong in China still. As we have mentioned briefly, we are still investigating of getting up to this 20,000 tons capacity by 2026. If we do so, we need a capital increase, and we have not decided exactly yet. We will come back on later presentations, more precisely on how we're going to do that. With this, I would just say thank you. Thank you for listening. Please, Charlotte, if you have received any questions from the audience, it would be nice to just have that.
Yes. Thank you very much. We have a couple of questions here. I'll just go straight ahead. The one question reads, "What are the consequences for the better than budgeted growth of the salmon to the operation? Will they reach maturity ahead of schedule? Is there sufficient room in the tanks, et cetera?
Okay. I understand the question that if fish are growing faster, will they mature sooner? Is that the question?
It's more what are the consequences of it? How will it impact operations, as I understand the question?
Oh. Okay. I get it.
Um.
Yeah. Yeah. Yeah. Okay. First, just some brief words on maturation. When fish are in clean and cold water and with light, with the proper light regime, then they will not get mature before time. If that should happen, that something happened and fish were to be mature before time, then this group of fish must be taken out of the system because they are not growing so well after they have started into maturation, and the quality will get very poor. Those fish need to go out of the system, so that we can use the system for producing, with the other, with the rest of the fish that's not mature.
Of course, this is an issue, but the focus must be that, prevent the maturation to happen. We do prevent it by having the strong focus that I mentioned before, with having enough cooling capacity, having enough cleaning to make sure that we have clean water in the system. If you have these two in place, we don't see maturation as a major issue.
Okay. Thank you very much. The next question is, have you tried to get prices from other suppliers, or do you have an obligation to use AKVA group for future construction phases?
I would say that we are very satisfied with the development that we have with AKVA group. Me myself, I have been involved in many, many projects, so I know well reference prices, what should a RAS facility cost, and we are also satisfied with the price level that we have in AKVA group. We don't see the necessity of going to other RAS producers. I have done so, and I'm still doing so in other projects I have been involved in. It's not because we need to be married to AKVA group, but we see that they deliver very good on quality and price. We are very satisfied on this project with them.
Thank you very much. That was the last question today. With that, I thank you very much for a good presentation. We look forward to what comes next. I thank everyone who's been listening in also for your attention, and wish you all a very nice day.
Thank you.
Thank you.
Thank you.