Land-based farming

DNB Markets | 2017

Alexander Aukner, +47 24 16 90 79

Tone B. Hanstad, +47 41 62 94 46

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We have identified 20+ projects with a planned output of 150kt by 2020

+145kt
160,000

140,000

120,000

100,000

80,000
20 + projects
60,000

40,000

20,000

-
2016 2017 2018 2019 2020+

Capacity plans are relatively large, though less than 10% of current global volumes

Source: Company information (on volumes in total and distribution if available), DNB Markets(estimate on distribution if not available)

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 It is not the first time you’r reminded of the unconventional oil supply development

5
USD
4.5
million barrels oil per day, shale

1,000
4
900
3.5
800
-70%
3 700
2.5 600
2 500
400
1.5
300
1
200
0.5 100
0 0

Jan-16
Jan-10

Jan-12

Jan-14
Jan-04

Jan-06

Jan-08
Jan-00

Jan-02

Sep-16
Sep-10

Sep-12

Sep-14
Sep-06

Sep-08

May-13

May-15
May-09

May-11
Sep-00

Sep-02

Sep-04

May-07
May-01

May-03

May-05

2011 2012 2013 2014 2015 2016E

Monterey Austin Chalk Granite Wash Woodford Marcellus Drilling cost / lateral length
Haynesville Niobrara-Codell Wolfcamp Bonespring Spraberry
Bakken Eagle Ford Yeso & Glorieta Delaware Utica

Steep increase in volumes from take-off and improved efficency

Source: US Energy Information Administration (EIA), Range Resources (Cost & Efficiency improvement – Northern Marcellus)

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..But it is even more relevant to look at what enabled growth for aquaculture

Fish suppy for human consumption, million tons

?

Aquaculture met det demand for fish when wild-catch failed to grow

Source: FAO 2016

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Success of land-based farming hinges on the pace of supply recovery

A Traditional supply recovers B Land-based take-off

5,000 5,000
4,500 4,500
4,000 4,000
3,500 3,500
3,000 3,000
2,500 2,500
2,000 2,000
1,500 1,500
1,000 1,000
500 500
- -
2006 2009 2012 2015 2018e 2021e 2024e 2006 2009 2012 2015 2018e 2021e 2024e

Norway Chile Other Development licences Land based Norway Chile Other Development licences Land based

If traditional farmers can revive growth, land based will be marginalized - If not land based may fill the gap?

Source: Kontali (actuals), DNB Markets estimates

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Why now?

Visibility on price believed to be better

 Stronger for longer means lower probability the price have collapsed before land based volumes hit the market

‘New’ land based technology improved

 Enables increased scale and quality issues addressed

Production cost in the sea increasing

 NOK5/kg increase just in sea-lice related cost

Increasing ‘up front investment’ for traditional growth

 Licenses cost +NOK60m if you can get your hands on one

Demand in distant markets picking up?

 Transport and freshness advantage of production close to end consumer

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 Record high prices expected to last
Spot price development, NOK/kg Price development, NOK/kg

NOK/kg
70

75 60 63
62
58
65 50

55 40
39 39 40
45 30

35 20

25 10

15 0
1 5 9 13 17 21 25 29 33 37 41 45 49 2013 2014 2015 2016e 2017e 2018e

High Low 00-14 2016 Average 00-14 2015 2014 Historical price Consensus forecast

Price expectations are historically high

Source: NSL/NOS, Fishpool (Prices); Kontali (histoircal volumes); DNB Markets (forecast)

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Recirculation Aquaculture systems are based on advanced technology
RAS2020, Kruger (Veolia)

Source: Company

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.. recognized and highly invested in by salmon farmers for large smolt

Source: Marine Harvest CMD presentation 2016

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RAS is making it possible to grow salmon to full size in the alps

In short:
Where: Lostallo, Switzerland
Metres above sea level: 400
Production capacity: 600 tons
Current status: Fish in facility

Technogy provider: Kruger

Concept: RAS2020
Other: Processing

Source: Graåkjær, Company

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