Atlantic Sapphire As

Good morning, America. Good afternoon, Europe. Good evening, Asia. Welcome to the Atlantic Sapphire first half 2024 report. My name is Gunnar Skinderhåg. I'm the CFO of the company. Together with me, I have Pedro Corar, who is the CEO of the company. Pedro will start with an operational update. I will continue with a financial update. And then Pedro will finish off with some closing remarks. So, Pedro, over to you. Thank you, Gunnar.

Hello, everybody. As mentioned by Gunnar, I will start making the operational update, and then I will give the word to my colleague. Okay, moving to the company highlights. Main highlights are as follows, starting by the normal statement said in previous presentations. The combination of our permits and licenses together with the closeness to a huge market should give the company all the competitive advantages required to become a unique supplier in the United States. We have stabilized our production, which in this kind of business is key. That means we are starting a period where we plan to achieve the full utilization of phase one while we prepare the next step by finishing the phase two decision process. Our plan, together with better size of fish as well as consistent production, is to increase our prices and at the same time optimize the operation in terms of performance and cost. Once phase two is in full operation, we estimate an EVTA generation above $100 million, considering a margin of $5 per kilo hog. The process will be performed by the combination of the competence of the existing team with the new management focus in adding value and fulfilling committed plans. We have defined a company business plan divided basically in three stages. Stage one called proof of concept will have as an output the proof that the farm can raise fish at all the required characteristics to be sold at a premium price in the American market in stable farming and biological conditions. This stage is expected to be realized by the end of 2024. Stage two, called resiliency and efficiency, running in parallel with stage one, will be the step to optimize phase one by fixing main bottlenecks that are currently limiting our production capacity as well as our feed conversion rates. The final output of the stage should be deemed cash positive by the end of 2025. And stage three, called phase two investment decision, correspond to phase two investment decision. We plan to finish all the design and the engineering by the end of first quarter 2025, allowing us to have the final capex that will permit to make the final decision. In term of biological development during first half of the year, From one side, we had the consequences of maturation events in summer 2023 due to high water farming temperatures. This situation produced bad quality fish, both in terms of color and average size, affecting sales price. On the other hand, and due to operational improvements done by the end of 2023, mortality during the first half was very low, even much lower than traditional farming industry. Being a very positive aspect low mortality results in a bigger stock of fish that was not possible to feed well with current feeding capacities forcing us to make elimination or early harvest of very small fish having also as consequence lower prices however and is it possible to see in the graph All this process ended with current very good picture in term of biomass distribution, where for the first time in the history of the company, more than 30% of the fish is about 2.5 kilos, showing a very good perspective. In term of harvest, during first half, we harvest 2.4 thousand tons of hog off of fish, which is a record and a much higher volume compared to same period in 2023. We expect a similar level of harvest for second half, but at much better harvest average weight and better prices, especially during last quarter. As part of the stage one, the change done in the second half of 2023, like the installation of new chillers to avoid future maturation, the elimination of different bottlenecks, the implementation of new protocols and the change of our technical service from reactive maintenance to preventive one, has allowed us to stabilize water quality, producing a drastic drop to normal water temperature level, as well as very low mortality. Low mortality in a rust operation is one of the main indicators of good farming conditions, which is, without no doubt, the main challenge in a land-based operation. This graph is probably the best way to show difference in performance for different groups of fish. The graph shows the evolution of average weight for different groups for the same farming periods. As reference, we have light blue lines that correspond to the Denmark curve and in dark blue our current growing model. Then we have in red line our historical batches and in green current batches from 28 to batch 34. As it is possible to see, new generations are coming with much better performance, not only compared to previous batches, but also compared to our model. The impact of that, especially in batches 28 and 34, will be a better tank volume utilization of the farm, an increase of the superior chair product, and final, an improvement of cost and the reduction of rust load. What do we understand of proof of concept? For us, and that's very important, proof of concept will be a stable production in many aspects. First, we consider four consecutive weeks of average weight above or equal to three kilos hock. a biological feed conversion rate below 1.3 for harvest fish, and at least 80% of harvest in superior grade. We will need to have stable farm operations for 12 months. That means monthly average water temperature below 14 degrees for our ungrown phase and monthly mortalities below 1% per month. In land days, one of the production restrictions is the feeding capacity, which is directly linked to the capacity of the system to keep good water quality. Since Q4 2023 today, feeding rate has been constantly increasing through the elimination of part of existing bottlenecks. In this stage, from November 2024 onwards, we are planning to make improvements to increase the water quality and, in consequence, increase gradually our feeding capacity to reach, by the end of 2025, an estimated annualized harvest volume of 8,000 tons, defined as a breaking point to move to cash positives. To increase our feeding capacity, we will need to do some investment. First, oxygen and ozone distribution system. Second, water flow improvements. And third, degasser and skimmer capacity. The combination of these three investments is what we are thinking will help us to move from 23 tons per day of feeding to 33 tons per day of feeding. Also, we plan to invest in a new water well to serve both phase one and phase two. We are now working in the final step of phase two. Phase two design is considering all the improvement and the lesson learned from phase one. After we finish the engineering and the design of phase two, we will start with the tender process in order to have the final investment required for this important step. Now I will give the word to Gunnar who will explain the financial update.

Gunnar, thank you. Thank you, Pedro.