Christmas greetings from Andfjord Salmon: Building a fish friendly future

Dear Andfjord Salmon shareholders, friends, business partners, neighbours, and colleagues,

23 December 2024

Another hectic calendar year is coming to an end. I would therefore like to take this opportunity to thank you all for your support throughout 2024 and summarise this year’s key achievements for Andfjord Salmon.

The Norwegian salmon farming industry has been under heavy scrutiny this year. The main criticism has pointed at challenges related to fish welfare and health, which manifests itself in mortality rates that are higher than desired and high levels of production fish with visible injuries.

I know that the fish farming industry is working hard to rectify these issues. It is in the joint interest of each individual fish farmer, the aquaculture industry and society as whole to further improve conditions for the fish. Despite all the unwanted headlines, it is important to remind ourselves and everyone around us that the salmon farming industry contributes to employment, value creation and food production in both small and large communities along almost the entire Norwegian coastline. We are proud to be a part of this.

Fish-friendly concept

Andfjord Salmon has not farmed salmon during 2024. Our focus has been on build-out and expansion of our Kvalnes site at Andøya. I must admit that with a site full of dump trucks and continuous blasting of tunnels, I sometimes long for the days when I once again can walk along the pools and watch the salmon enjoy themselves in the laminar water flow.

On such days I also remind myself that the facility we are building at Kvalnes is designed to make the salmon’s stay as pleasurable as possible, so that we produce healthy fish and once again achieve industry-leading survival rates.

Because our construction efforts have optimal fish welfare in mind: Our water intake begins at 50 metres water depth to avoid problems with salmon lice, jellyfish and poisonous algae, while at the same time providing our fish with natural, oxygen-rich Arctic seawater. We are developing a large-scale flow-through system because this means that we do not have to use energy on lifting, heating or cooling the natural seawater. We use a laminar water flow because this is the closest to the salmon’s natural habitat in the wild. Our pools are natural barriers that prevent escapes of farmed fish into the ocean. And we collect and recycle the biological waste that sinks to the bottom of the pools, which allows us to maintainin good pool conditions for the fish while also coexisting with the local marine ecosystem with a clear conscience.

Nofima confirmation

Andfjord Salmon has always focused strongly on biology and fish welfare. Our adopted science-based approach to land-based fish farming has been retained despite not having fish in our pools.

In the first half of 2024, independent research body Nofima submitted their final report from the first production cycle, covering the full period from smolt release to harvest. The report documented biological conditions and fish welfare in the first pool and highlighted our comprehensive welfare and health documentation plan. The report documented numerous operational welfare indicators, including environmental factors, fish behaviour, growth, and health. Although we are still a small player in a large global industry, I am proud to say that this report clearly showed that our land-based flow-through system enables fish-friendly salmon farming. We have demonstrated it in a small scale, and now we are going to repeat it in bigger scale.

Solid build-out progress

The first workstream under this scale-up plan was the excavation of the next 12 pool pits, which was completed ahead of schedule of at the end of January this year. The excavation covered two rows of pools, which in the future will house six pools each – twelve in total – equal to a total production capacity of 19,000 tonnes HOG.

The other high-activity workstreams during 2024 have been the waterways, harbour area and pool construction. The waterways and harbour area are designed to support a future production of 40,000 tonnes of salmon. In this initial build-out phase, we will complete four concrete pools, which brings total production capacity to 8,000 tonnes HOG at Kvalnes from 2025.

I am pleased to say that all ongoing workstreams are either on- or ahead of schedule. As reported at the end of November, the waterways – including 4.4 kilometres of tunnel infrastructure – is close to completion. The harbour area workstream then stood at 61 percent completion. At the time, the pool construction workstream was at 51 percent completion. Columns, supports and

preparations for wall elements have been completed for pool K1 and is in progress for K3. The work has continued with solid progress during December.

“Post smolt” and shareholder support

In February this year, we announced plans to implement a “post-smolt” production strategy, a supplement to production of human grade salmon, to capitalise on unutilised pool capacity in the first half of each production cycle. This will bring substantial benefits to ocean-based fish farmers, the fish itself, the marine environment, the regional aquaculture industry, and Andfjord Salmon and is a valuable supplement to our own production of human grade salmon. We are simply utilising our infrastructure in a smarter way to create more value for multiple stakeholders.

The combination of this “post-smolt” strategy, impressive biological results from our first production and the Kvalnes build-out on track and on budget generated significant interest from

industrial investors earlier this year. We decided to utilize this positive momentum to our advantage and raised NOK 350 million through a private placement of new shares. We were delighted to see that that strong, international and Norwegian industrial investors continue to support our ambitious plans.

Looking ahead

Having spent the past 18 months primarily on construction work, we will gradually start preparing for fish farming operations again – much to the joy of my dedicated colleagues.

Finalisation of the waterways, construction of the next four pools, and installation of the pools’ technical infrastructure will be top of our list in the coming months. Then we will start preparations for testing of the infrastructure and pools. We are excited about the challenging and fun work that lies ahead of us.

Finally, I would like to extend a big thank you to my colleagues at Andfjord Salmon. I only have slightly more than 20 colleagues, but I sometimes feel as if they are 200 because of the execution power they show every day. Our subcontractors involved in the Kvalnes build-out also deserves a thank for their continued strong support.

I would like to wish you and your family a peaceful and merry Christmas and a happy New Year.

Martin Rasmussen

CEO, Andfjord Salmon