Pearl Coast Prawns & Derby Hydro Power

1 DESCRIPTION OF BUSINESS

1.1 Prawn Farming

Pearl Coast Prawns has operated an aquaculture business at Derby in the Kimberley region of WA since 1997. Production to date has been prawns (two species, Black Tiger and Banana Prawns) for local and state-wide markets.

The business was established using proven technology from established aquaculture farms in Saudi Arabia and currently employs staff with considerable technical and scientific credentials.

The prawn market worldwide is huge and expanding, rising from 4 million tonnes in 1990 to over 7 million tonnes in 2015. Prawn farms in many Asian countries are disadvantaged by poor environmental and farming practices. Conversely, the prawn farming operation of Pearl Coast Prawns in Australia has the significant advantage of a clean, natural environment, where the proximity to unpolluted tidal flats and adjacent salt water creates an ideal environment for aquaculture. Pearl Coast Prawns currently operates 5 hectares of ponds on 2300 hectares of land at

Derby WA. This is Stage 1 of the long-term venture. Stage 2 is ready to commence and will expand the business to 1200 hectares of ponds. This will allow the company to increase production to an achievable target of 10,000 tonnes per year.

The expanded capacity will also facilitate the introduction of hatcheries for fin fish, particularly barramundi, for which there already exists a substantial and expanding market.

1.2 Hydro Power Generation

Prawn farm production is a heavy user of electricity. In cost terms, power is second only to food for the growing prawns. The proposed Stage 2 expansion is therefore dependent on the availability of on-site power.

Fortunately, this necessity can be easily addressed at this location. Doctors Creek at Derby, the location of the prawn farms, has an extremely high daily tidal stream movement (12 m rise and fall daily). This makes it ideal for the establishment of a tidal hydro-power station. Tidal power generation is reliable, renewable energy, not subject to climate or weather factors.

Derby Hydro Power Pty Ltd is a company already established, with extensive R&D already undertaken and with approvals for an initial 40MW tidal power station. The site for theproposed plant in Doctors Creek is adjacent to the lease for the prawn farm. Stage 2 approvals to expand this to 100MW are subject to further environmental assessments and formal approval.

The first stage 40MW tidal power-generation station would provide immediate, on-site power

to the prawn farms, with surplus capacity available for supply to the regional grid and other power users in Derby.

1.3 Merging the Two Businesses

The obvious synergies between the prawn farms and the hydro power station makes it logical and economically rational to merge the two ventures into one.

The proposed investment plan for Pearl Coast Prawns does just that.

2 Expansion of the prawn farms to 10,000 tonnes per year

With a wholly-owned on-site tidal power plant supplying all the prawn farm’s power needs and selling excess capacity to other users in other markets. By utilizing the land that is reserved for Derby Tidal Power, the prawn farm could be expended in Stage 3 to a total of 4000ha of production ponds on a total of 8,000 ha of saline mudflat. Production would rise to 36,000 tonnes per annum.

POWER GENERATION CAPACITY

Derby Hydro Power’s proposed 40MW tidal power station would supply:

  • 3.6MW to Pearl Coast Prawns
  • 5.0MW to the town of Derby

With surplus capacity available to supply:

  • Broome (currently uses 28MW from gas-fired generators)
  • Other existing users in the region.

The investment proposal for Derby Hydro Power includes the construction of a new grid network. The availability of competitively priced electricity in the West Kimberley region will create an economic environment which is expected to encourage new investment to support the expanding tourism and offshore oil and gas industries.

3 TIMELINES

The existing prawn ponds are currently in production producing two crops a year. With new capital investment, Stage 2 can be commenced in Year 1 with some of the expanded capacity production ready to ship to market in 2 nd half, Year 1.

Construction and commissioning of the tidal power station (including regional grid) will take 18 months. On completion, revenue from surplus power sold to new customers will be immediate and ongoing.

4 FUNDING

Funding to support the CapEx for Pearl Coast Prawn farm expansion and the integrated Derby Hydro Power plant will be via capital loan agreements with Pearl Coast Prawn’s associate entity, OenoViva Capital Resources.

Specifically, funding in Year 1 is required for:

1. Prawn farm expansion

  • Construction of additional 1200 hectares of ponds on current leasehold land.
  • Infrastructure including hatchery, buildings, roads, holding ponds, processing facility, freezing works and earthmoving machinery.

Preliminary estimate:

Expansion to Stage 3:

AU$207 million

requires capital of AU$650million.

2. Tidal Hydro-Power Station

  • Civil engineering works, barrages, gate structures
  • Turbines, Generators, Transmission
  • Regional electricity grid

Preliminary estimate: AU$450 million

OenoViva Capital Resources will use the assets of its balance sheet to secure liquidity for loans to the integrated entity of Pearl Coast Prawns and Derby Hydro Power from one or more international banks Serviceability of all loans will come from the commercial trading activities of prawn production and power generation and be secured via Chattel Guarantees over commercial assets of the group.

5 FINANCIAL

Detailed financial modelling for each of the businesses of Pearl Coast Prawns and Derby Hydro Power is currently being prepared and finalised by the company’s advisers and external industry consultants and will be made available as part of the lender’s due diligence process.

6 CONTACT

For all matters related to the funding of Pearl Coast Prawns and Derby Hydro Power, please

contact:

OenoViva Capital Resources

Level 3, 2 Drewery Place

Melbourne 3000 VIC

Australia

M: +61 424 324 135

E: info@oenoviva.com

Started:
4 Feb, 1997

Stage 1 
250 M AUD

Project Cost
650 M AUD

Preliminary estimate

Expansion to Stage 3

AU$207 Million

Tidal Hydro-Power Station

  • Civil engineering works, barrages, gate structures
  • Turbines, Generators, Transmission
  • Regional electricity grid

Preliminary estimate: AU$450 million

Fund distribution
  • STAGE 4
  • STAGE 3
  • STAGE 2
  • STAGE 1