24 Jan 2014

SeaDragon looks to $300m goal

7:31 am on 24 January 2014

Fish oil maker SeaDragon has told investors it could become a $300 million company in five years, if it succeeds with its plan to take a bigger slice of the burgeoning omega-3 market.

The Nelson-based company, with a market capitalisation of $33 million, is raising funds through a share purchase plan to go towards building a new factory.

Last week, it outlined to investors its growth plans as a manufacturer of omega-3 oil as a dietary supplement and food fortifier and it also assured investors about its finances and falling share price.

SeaDragon is the largest producer of refined fish oils in Australasia, exporting more than three quarters of its products. It sells mainly squalene and other shark liver oil products.

But it is the double-digit growth of the market in omega-3 oils it wants to exploit, offering the higher-value hoki, salmon and tuna oils as an alternative to the more widely used anchovy-based omega-3.

Chief executive Ross Keeley says the fortified food market is a big target and although most New Zealanders think of fish oil has being consumed as fish oil in soft drop capsules that is only about 10 percent of the world market.

"The majority of omega-3 around the world is consumed in fortified and functional foods and beverages, such as the fruit juice, the infant nutrition, and within that sector which is in excess of $US30 billion per annum for omega-3 only, dairy products dominate."

The company is in talks with major dairy producers about supplying omega-3 to determine what the opportunity is for SeaDragon in the future, as the product is currently imported.

Mr Keeley says the company is still a year or two away from seriously researching micro-encapsulated powders for inclusion not just in infant nutrition, but in other fortified foods and beverages.

He says the factory near Blenheim, costing $4 million to $6 million, will be the crucial next step.

The company has already raised around $1.8 million with the sale of two tranches of shares in the IT company, Snakk Media.

Under the Share Purchase Plan, it will issue 125 million new shares at 1.6 cents each, raising a further 2 million.

Shares in SeaDragon are now around 2 cents, after hitting a high of 4.5 cents in November, and some investors are worried they will fall again.

But new independent director Tim Preston remains confident, saying the refined fish oil plant is an exciting development and if the company can deliver on that then the share price will take care of itself.