SFG 0.00% 0.4¢ seafarms group limited

Great post Woodie, you've set the scene very well. I hope you...

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    Great post Woodie, you've set the scene very well. I hope you don't mind me adding some additional thoughts to that vision.

    Firstly let's take a very broad approach. You can ask a simple question regarding the value of PSD. Well as it currently stands PSD is actually worth nothing! But take it beyond that, similarly to how valuations are made of mineral projects, which, not having been built, have a potential valuation, either based on past expenses (in this case SFG has spent around $100 million), or using "more flair and sophisticated means" adopting some estimated in-ground valuation. Valuation is a tricky business, especially when you value major mineral projects like undeveloped porphyry copper projects, or huge iron ore projects - FMG for instance didn't exist 20 years ago, wasn't even a concept, a value of nothing! Most people ridiculed the concept and considered the eventual debt burden on the fledgling company as being prohibitive. Now it's amongst the great global iron ore producers, with a market cap around $27 billion.

    Back to SFG and it's PSD project. On a world scale as a concept it's still a small contribution to overall prawn production, albeit of a higher quality and premium priced tiger prawn - which is sought by the market, as supported by Nissui subsidiary Sealords.

    Even though as would be a minor supplier of prawns the PSD concept will spit out gross revenue numbers almost to the scale of a major porphyry copper project, or smallish FMG! At this stage you can argue the exact potential value of PSD, but looking at it based on the limited released numbers, of say 100,000 - 150,000 tonne of product (in itself such a huge range!), and annual revenue around $3 billion (I've seen higher quotes), there is a likely valuation of the finally delivered 10,000 Ha project in excess of $10 billion. How much of that SFG retains is anyone's guess, so for the argument re NAIF, because that has a considerable bearing on SFG's final equity. Suffice to say, under any finally negotiated outcome, the valuation on current shares held is considerably more than the paltry 8.8 cents we are currently looking at.

    And so when I consider the risk, and the potential reward, I believe that the asymmetric future possible price is a no-brainer!

    That risk/reward outlook is supported by the very fact that there are so many stakeholders supportive of the project - not just the NT, WA, Fed govt, but also the local indigenous population (including the Elders who have already agreed the terms of the ILUA), the local populations in towns that have an involvement in PSD development and operations, also the conservation movement who recognise the value of aquaculture production at a time of declining wild catch prawns. Indeed NT Chief Minister Michael Gunner acknowledges PSD becoming a new industry with annual revenue rivaling northern beef production.

    At a time when Australia is being threatened with potential recession caused by a declining construction industry, and banking restrictions, declining employment outlook. This new PSD industry will provide employment for 1,500 plus the flow on to other opportunities. That in itself arvues why PSD qualifies for NAIF funding.

    So you can discuss the negatives on a daily basis, you can complain about lack of updates (and I do get frustrated with limited knowledge of what's happening behind the scenes - and I'm sure there's a lot of confidential discussion happening that simply can't be included in any update anyway) but I'm certain that things are happening, that at some point an announcement or more will be made to push this concept into a truly development mode. And when that happens I want to be a shareholder, I don't want to say in 10 years time, that I saw SFG transform into another FMG-like behemoth that I could of, should of but didn't, invest in!
    Anyway that's my view.
 
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