The first stage of aquaculture company Seafarms Group's Project Sea Dragon will cost at least an extra $80 million due to changes to project scope and increasing material costs.
The first stage of aquaculture company Seafarms Group’s Project Sea Dragon will cost at least an extra $80 million due to changes to project scope and increasing material costs.
In June, capital works for stage 1a of the project were estimated to cost between $275 million and $290 million.
Today, the company announced the work was going to cost between $370 million and $410 million.
Stage 1a includes the development of about 400 hectares of production and nursery ponds and upstream and downstream facilities at Legune Station in the Northern Territory.
When completed, stage 1a will have the capacity to produce about 6,000 tonnes of black tiger prawns each year.
In a statement to the ASX, Seafarms Group said the key contributors to increased cost included the decision to increase the performance and size of the plant; the increased cost of steel, copper and construction labour; and funds associated with fixing hydrological issues at the site which have been impacting the road access upgrade.
It said the estimates included an allowance for further increases, due to changing COVID-19 border and transport restrictions.
Overall, the company said work at the Legune site was on track.
However, delays are emerging at the planned Exmouth and Bynoe sites, which might impact the timing of stocking the pond during commissioning.
Seafarms said the most significant risks to the project are the onset and duration of the wet season and COVID-19 transport delays.
Project Sea Dragon is a staged development comprising of up to 10,000 hectares of prawn production ponds, which will cultivate prawns year-round for domestic and export markets.
The project is supported by a series of facilities in northern Australia, with a quarantine and founder stock centre at Exmouth and a processing plant in Kununurra.
Seafarms Group raised $107.5 million in June to start construction of the project.
Shares in Seafarms Group were down 12.3 per cent today to 5 cents each when the market closed.