CSS - Clean Seas Seafood

[tge oracle]

Re: CSS - Clean Seas Tuna

I have a quick question for Tge oracle..

do you have any affiliations with the CSS?
your background seems quite extensive about the industry and the company and i have had this question ever since your post on the
14th march 09



I was just wondering if my query is unjustified.

Hello Enigmatic, No, I don't have any affilliation with CSS what so ever. I am merely an investor who does have substantial and in depth knowledge of aqauculture industry and commercial fisheries in general. This has been gained through my particular interest in aquaculture and fisheries over many years and rigorous research into the aqauculture companies I have invested in. It would be improper and un-ethical for me, or any other poster, to use share forums, without full disclosure, if they had an affiliation with a company.
My reference to " Our Company " was made to any person invested in CSS. As a shareholder you are an owner of the company and that is the context in which I used that phrase. If you own CSS shares then it is also your company.

I regard this forum as an information exchange portal for fellow aquaculture investors and certainly don't recommend anybody purchase CSS or any other share for that matter.
I trust this explains my position.

Disclosure : I hold shares in CSS and TGR in the aquaculture sector.

 

[enigmatic]

Re: CSS - Clean Seas Tuna

Yeah cheers for that.

Have been reading up on CSS for a while now, been growing more and more interested as food is one thing that has ever increasing demand especially fish.

Still on my watchlist but I can't commit any capital in the current market to this one, keeping a keen eye on it though.

hopefully you didnt take any offense to my question was just interested.

 

[tge oracle]

Re: CSS - Clean Seas Tuna

Yeah cheers for that.

Have been reading up on CSS for a while now, been growing more and more interested as food is one thing that has ever increasing demand especially fish.

Still on my watchlist but I can't commit any capital in the current market to this one, keeping a keen eye on it though.

hopefully you didnt take any offense to my question was just interested.

No not at all enigmatic. I hope you find the information and resarch of interst as you decide whether, or not , to invest.
CSS is still a risky investment. It has been substantially de-risked over the past 3 years through:

1. Successful transfer of broodstock to shore tanks.
2. Rapid growth of YTK sales , production and marketing.
3. Successful propogation of YTK and Mulloway on a commercial scale, regularly.
4. Confirmation that SBT broodstock can be held in captivity in shore tanks for propogation without mortaility events though desease etc, indefinately. This has been achieved for some 2.5 years now.
5. Succesful spermiation of male and female broodstock.
6. Significant fertilised egg production which has lead to viable larvae.

The final and most important de-rsiking is the succesfiul closing of the life cycle of SBT through achieving a commercial scale quantity of SBT fingerflings and proof that this can be replicated.

Once this has been achieved the profile of CSS will dramatically change from a high risk entity to one of a lower risk commercial aquaculture company e.g. Tassal Group.
If this is achieved I would anticipate CSS moving rapidly beyond the All Ords index and into the ASX 300 and beyond. This will attract the interest of major fund managers and more particularly index fund managers who only have a mandate to invest in indexed shares. There may well be a number of fund managers eagerly awaiting CSS's progression, should it succeed, in order for them to invest.

I have further comments to make on the potential for this company, not previously discussed or considered, if they do succeed with significant quantity of fingerlings of a scale suggested by Hagen, but I will leave those comments until such time as this is achieved, if at all.

 

[truevalue]

Re: CSS - Clean Seas Tuna

They now have the challenge of the nutritional needs of the lavae as i predicted was a hurdle in a earlier post. This is where they failed last year and where they are now.

I repeat my summary from a previous post that if they have even a hundred fish in the bay this year they will be considered to be a successfull IMO.[/QUOTE]

Basilica,

My info tells me last year they had around 30k fertilised eggs. This year they were getting 10s of thousands of eggs from Tuesday to Thursday last week when suddenly on Friday they got 100s of thousands of eggs and this continued all through the weekend. This is why Hagen waited until Friday to cry. They had a massive quantity of eggs of much higher quality than previously obtained and they had a much higher chance of finding the magic formula to ensure survival. The quantity of eggs suprised them which is why they were caught short of feed.

I agree with you that 100 fish in the water is a success because it proves they have closed the life cycle. I do however think that if they do close the life cycle they are more likely to have 20,000 fish that make it through assuming a 99% mortality rate.

 

[kenny]

Re: CSS - Clean Seas Tuna

A question from a new reader to the CSS thread, guys.

Does CSS have the capital or infrastructure to cope with successful breeding at this stage? Or perhaps a cap raising may be necessary?

The information released so far certainly sounds promising and CSS's product ticks a lot of the boxes for what the world's food situation needs and wants.

Truevalue, I have little idea towards coming to a reasonable valuation. Is a 99% mortality rate consistent with industry standards?

Is the farmed product going to achieve similar prices at market to other farmed products in relation to their 'wild' counterparts?

Cheers,

Kenny

 

[truevalue]

Re: CSS - Clean Seas Tuna

HI Kenny,

Yes CSS will need a capital raising post the successful closure of the SBT lifecycle. They say $50m in equity and $50m in debt. May be more equity in this environment.

In a normal year 99% mortality would be high. They certainly do much better in Kingfish. This SBT process is new and nobody knows what they can do in this regard. Time will tell.

CSS will produce a product that will attract a similar price as the "wild" fish due to most SBT being produced today being largely farmed. Tuna ranching is the most common process used by tuna fishermen these days which involves surrounding a school of juveniles with a large sea net and towing them slowly back to Port Lincoln where they are fattened up in sea cages for about a year before they are harvested.

Valuation is very difficult and subjective given all the uncertainties around SBT and capital raisings. I personally think the Kingfish is worth 30-40c/share and the Tuna is an option. Tuna is a much better prospect than Kingfish because SBT sell for around $25/kg while Kingfish sells for around $9. the gross margin on SBT is $15 compared to $2-3 for kingfish. If CSS can produce 10,000 tonnes of SBT this could equate to $250m in revenue and $150m in gross profit. That would easily make CSS a 10 bagger from here. Plenty of water under the bridge before that happens though.

 

[FI$H]

Re: CSS - Clean Seas Tuna

Suppose they announce a significant amount of fingerlings at the end of april. where do you see the stock (price and volume)?

 

[truevalue]

Re: CSS - Clean Seas Tuna

Suppose they announce a significant amount of fingerlings at the end of april. where do you see the stock (price and volume)?

Well that brings the value of that option up alot. I am hopeful that the price will go well north of $1, but it is hard to say with a capital raising in the wings. I would prefer to see a capital raising at $1.50 than $0.60 but that depends upon who comes up with the money.

I know there are strategic investors from Europe and Japan waiting for such an event as live fingerlings and the Stehr family have some strings they can pull to tip in more capital. So between the two groups the capital requirement may be pretty much covered. The small volumes in the stock generally are indicative of a loyal and educated shareholder base who will probably want to contribute to the business as well. Based on previous capital raisings exsiting holders will get first right to any share offering.

 

[FI$H]

Re: CSS - Clean Seas Tuna

Thanks, I'm confident that they'll make it happen and that we'll see temporarily prices far higher than the once you've suggested. I just like to get a sentiment on what to expect for the weeks and months once the price settles.

 

[kenny]

Re: CSS - Clean Seas Tuna

Thanks Truevalue,

My suspicions was that CSS would be prudent to push the flow of announcements and milestones along prior to any proposed cap raising. Certainly any raising closer to the $1.50 - $2 level would be far more appealing and reinforce the value of the proposition.

Would it be safe to assume that contracts for the sale of any increased volumes of product should not be hard to come by? SBT demand overseas outstrips supply?

Regards,

Kenny

 

[truevalue]

Re: CSS - Clean Seas Tuna

Thanks Truevalue,

My suspicions was that CSS would be prudent to push the flow of announcements and milestones along prior to any proposed cap raising. Certainly any raising closer to the $1.50 - $2 level would be far more appealing and reinforce the value of the proposition.

Would it be safe to assume that contracts for the sale of any increased volumes of product should not be hard to come by? SBT demand overseas outstrips supply?

Regards,

Kenny

One of the real bull points there Kenny is the demise of the Northern Bluefin Tuna which has suffered a rapid decline in harvest for the past 10 years. The 10,000 tonnes that CSS wants to produce is frankly a drop in the ocean relative to the NBT tonnage that has been lost out of the Mediterranean.

On the other hand we are starting to see some recovery (albeit small) in wild SBT stocks thanks to the fishing quotas. As long as those quotas remain in place however the only new supply coming out of this region will be from CSS.

 

[FI$H]

Re: CSS - Clean Seas Tuna

To me the relationship between Kinki, CSS and Allotuna isn't transparent enough.
Does CSS need to worry about Kinki university or Allotuna as competitors in the long run? Do I need to feel uncomfortable about prof. chris bridges being involved with Allotuna and CSS at the same time or is Allotuna an entirely academic institution? What has CSS to offer right now that Kinki or Allotuna can't? Will the tuna seasons vary between companies in the northern and southern hemisphere? Did Allotuna manage to grow out their fertilized eggs to fingerlings? Who owns the intellectual property jointly developed by CSS and Allotuna or CSS and Kinki?

I would appreciate any comments that shed some light on this.

 

[tge oracle]

Re: CSS - Clean Seas Tuna

To me the relationship between Kinki, CSS and Allotuna isn't transparent enough.
Does CSS need to worry about Kinki university or Allotuna as competitors in the long run? Do I need to feel uncomfortable about prof. chris bridges being involved with Allotuna and CSS at the same time or is Allotuna an entirely academic institution? What has CSS to offer right now that Kinki or Allotuna can't? Will the tuna seasons vary between companies in the northern and southern hemisphere? Did Allotuna manage to grow out their fertilized eggs to fingerlings? Who owns the intellectual property jointly developed by CSS and Allotuna or CSS and Kinki?

I would appreciate any comments that shed some light on this.

Hi Fish,

You raise some very interesting questions that are probably shared by a number of the more learned CSS investors. These are really questions that can only be answered by CSS Management. My response is only guess work , but I'll give it a try.

1. Competition - Yes, Kinki and Allotuna will provide a level of competition but remenber CSS will be breeding SBT, Allotuna and Kinki will breed NBT. Although very similar in appearance, many Japanese consumers do regard the SBT as the superior grade of fish. I, personally, am not concerned about the competition aspect to this project.

2. Chris Bridges - No, I don't see a need for concern, there appears to be a lot of information sharing amongst all three which should benefit them all.
As far as I am aware Allotuna is a commercial entity, Kinki is an academic institution which has a commercial mandate for NBT propogation.

3. What can CSS offer - SBT propogation. The only entity in the world to offer this product.

4. Seasons - Yes, the seasons are completely opposite but this won't be an issue because I believe CSS will eventually produce SBT throughout the year.

5. Allotuna - No, my research has failed to provide any evidence that Allotuna succeeded beyond larvae production. They appeared to hit the same road block as CSS last year i.e. 100% mortality rate to larvae.

6. Intellectual property - Probably all three. But I think Kinki and CSS have a much closer relationship.



To give you all an indication of rhe level of success CSS may achieve, please refer to the following link which details the success rate achieved by Kinki.

http://www.21coe-kinkiuniv.jp/pdf/3rd_PBT_English.pdf

 

[truevalue]

Re: CSS - Clean Seas Tuna

To give you all an indication of rhe level of success CSS may achieve, please refer to the following link which details the success rate achieved by Kinki.

http://www.21coe-kinkiuniv.jp/pdf/3rd_PBT_English.pdf

I hadn't seen this link before Oracle. It is quite good. Makes my prediction of 20,000 fish in the water look achievable. Kinki achieved a 98% mortality.

20,000 fish would grow to around 800 tonnes in the water by 4/2011, baring any catastrophies.

 

[tge oracle]

Re: CSS - Clean Seas Tuna

Here's a news article from last Wednesday ( 25th March ) . It provides some insight as to how things are progressing. It sounds like the fish are continuing to spawn and have done so for the past few weeks. On the basis that Hagen has advised that they have eating and swimming SBT I would estimate that some of the SBT larvae , from earlier spawings, have now progressed to fingerlings of about 20-25mm. If this is the case, they will have progressed beyond the sensitive dietry requirements for larvae and moved to a more stable diet which will make them a lot easier to feed and care


for.http://eyrepeninsula.yourguide.com....eral/putting-arno-bay-on-the-map/1469659.aspx

 

[tge oracle]

Re: CSS - Clean Seas Tuna

Here's another article of interest. Looks like news of CSS's potential SBT breeding success is spreading rapidly throughout the world with new players emerging, even from Scotland of all places.

It's interesting to note CSS has an agreement with IATTC as well.



http://www.growfish.com.au/content.asp?ContentId=13095

 

[kenny]

Re: CSS - Clean Seas Tuna

Thanks for the interesting article links, tge oracle.

It would be nice to see if any royalties stem from using the breeding protocols developed or are they "open source".

Northern hemisphere development of tuna stocks will help improve supply but will it affect demand for SBT?

Cheers,

Kenny

 

[tge oracle]

Re: CSS - Clean Seas Tuna

Thanks for the interesting article links, tge oracle.

It would be nice to see if any royalties stem from using the breeding protocols developed or are they "open source".

Northern hemisphere development of tuna stocks will help improve supply but will it affect demand for SBT?

Cheers,

Kenny

I'm not sure how these protocols were agreed too. This could be just information sharing or a commercial agreement, but ASX disclosures make no reference to fee's etc. so I guess it is information sharing on the grounds of scientific advancement of the protection of Tuna species throughout the world. An admirable cause really. Aquaculture is the future for all forms of commercial fisheries in my view and that is, partly, why I regard it as an industry of the future. It has been a bit " hit and miss " up to now so the investment community is still skeptical. That will change as the industry becomes more mature and reliable in it's ability to deliver.

On the issue of competition, as I have previously stated in an earlier post connoisseurs throughout the world regard SBT as the highest of quality breed Tuna. Although similar to the NBT it is a totally different fish with it's own unique texture and flavour. This unique species will only be bred by CSS so they will be the only supplier of SBT.
Also CSS , I hope, will have first mover advantage on the commercial production of SBT on a significant scale. It will not be easy for any new comer to replicate CSS's success, indeed , it has not been easy for CSS.

 

[BlueHshoeLvs CSS]

Re: CSS - Clean Seas Tuna

Just a quick note to say thanks to truvalue / oracle / fi$h & basilica for a great discussion and informed comments. I too am a long standing CSS investor (from float) and your insights & thoughts on the stock are v.informative. I think we're all singing from the same hymnbook, there is a great future in investing in food, and should the next couple of months go well, we could well be reaping the benefits when the market returns to some sense of stability. Back above $2 would be nice!

 

[Basilica]

Re: CSS - Clean Seas Tuna

Just a quick note to say thanks to truvalue / oracle / fi$h & basilica for a great discussion and informed comments. I too am a long standing CSS investor (from float) and your insights & thoughts on the stock are v.informative. I think we're all singing from the same hymnbook, there is a great future in investing in food, and should the next couple of months go well, we could well be reaping the benefits when the market returns to some sense of stability. Back above $2 would be nice!

Hi BlueHorseShoe, Welcome to the forum. How did you choose a name like that?
What let you to be interested in Aquaculture?