MURRAY COD AUSTRALIA LIMITED — Investor Presentation 2019

Jul 28, 2019

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July 2019
Murray Cod Australia Ltd
ASX Code: MCA
LIFE TASTES BETTER OUR WAY
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CORPORATE

Share Price Performance and Volume

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5,000 0.25
4,500
4,000 0.20
3,500
3,000 0.15
2,500
2,000 0.10
1,500
1,000 0.05
500
0 0.00
Price ($)
Volume('000)
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Stock Overview	Stock Overview
ASX code	MCA
Share Price (25 July2019)	$0.195
Market capitalisation (@ 19.5 cents)	$89.0m
Shares on issue	456.4m
Options on issue	92.7m
Deferred Consideration & Performance Rights	26.4m
Current cash (30 June 2019)	$3.0m
Tradingrange (year rolling)	$0.088 to $0.225

Ross Anderson	Chairman
Matthew Ryan	ManagingDirector
Martin Priestley	Non-Executive Director
George Commins	Non-Executive Director

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MCA - INVESTMENT PROPOSITION

Luxury Product:

High Growth:

Green &

highly sought after as a table fish by consumers and chefs

Production capacity 40 tonnes pa in 2017 now over 1000 tonnes. Aiming for 10,000 tonnes before 2030

sustainable: Grown in natural habitat, strong synergies with irrigated agriculture, and low environmental footprint

Price premium: Higher wholesale prices paid for Murray cod HOG Equivalent ($24/kg)

Value creation:

growing demand, high profit margin and high barriers to entry

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• HOG is generally referred to in the salmon industry meaning “head on gutted” fish. MCA sells whole fish including the gut at around $20 per kg

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A UNIQUE OPPORTUNITY – LAND BASED AQUACULTURE

Global Population Growth, Pressure on Oceans, Declining wild fish stocks and Climate Change

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Global demand for protein – especially for high quality fish protein

Innovation via existing local infrastructure and a rare premium native fish

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GLOBAL AQUACULTURE PRODUCTION

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China’s
entire production
Alaskan Pollock Catch
67 million tonnes
1.5 million tonnes
Australia’s entire
production 97,000 World’s entire
tonnes consumption
151 million tonnes
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• Source: State of World Fisheries an Aquaculture 2018 FOA of United Nations 9 Jul 2018

• Aquaculture 80 million tonnes 53%

• Wild Catch 71 million tonnes 47%

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• Aquna Cod 10 thousand tonnes target (before 2030)

• Australia total Aquaculture production 97 thousand tonnes

On a global scale Aquna cod is expected to remain scarce, being a luxury food product at a premium price

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WHAT IS AQUNA COD

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• Capable of growing to be of the world’s largest freshwater fish

• Historically a Premium Table Fish

• Creamy white flesh with firm texture and mild taste (similar to Soon Hock)

• In 1880’s highly profitable commercial fisheries sprang up in the Murray-Darling Basin and Australia consumed estimated >500 tonnes per annum.

• By 1950’s wild catch was down to 311 tonnes and declined to less than 30 tonnes by late 1960’s and it became forgotten by Australian metropolitan consumers

• Currently listed as a vulnerable species and commercial fishing of the species is prohibited in Australia

• Current growth in demand for MCA farmed cod is outstripping growth in supply

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AQUNA COD WELL SUITED TO AQUACULTURE

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High stocking density tolerance Tolerance for handling and grading Medium – fast growth rate (1kg in 12 months) Easy to wean to artificial diets Relatively broad water quality requirements Efficient food conversion ratio (1.1 to 1) Existing/latent domestic and export potential Similar species to marine groupers and mandarin fish (appealing to Asian markets)

Existing R&D and extension networks and infrastructure in commercialisation of Aquna by MCA

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MCA HAS 2 DISTINCT DIFFERENCES AS A LISTED AQUACULTURE COMPANY

1. Land Based

Production Model

1. Aquna Cod is one of the world’s rarest luxury seafoods

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LAND BASED MODEL

Environmental Risks Alleviated

• No waste water leaves the property

• Risk of disease transfer to native populations almost non existent

• Purpose built ponds are not near any native waterways

• Nutrient enriched waste water irrigates adjoining crops or pastures

• No fish can escape

Operational Risk and Cost Reduction

• No bad weather issues

• No Seals or Sharks

• Easy access for land vehicles and by foot

• Very low water usage

• Fresh water does not rust our equipment as rapidly as salt water

• Risk issues are usually limited to one pond

• Rising ocean Temperatures not an issue

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LAND BASED MODEL

Lower Capital Requirements

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• Lease model is

• MCA operates the site

• Operating costs borne by MCA until fish are saleable – 18 months approx

• ‘Capital Lite’

• MCA uses its Pen Systems and fish stock

• Farmer builds the site including all earthworks, plumbing and electrical

• 15 year leases to contract growers

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GLOBAL LUXURY FOOD BRAND

3 Product Lines this year Fresh Fish (not frozen)

Future Development

Fish Skin

Fish Fat -Cooking Product with high Omega fats

• Cooked

Sashimi

Fish Stock

• Health Product

Hot Smoked

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GLOBAL LUXURY FOOD BRAND Life Tastes Better Our Way

MCA believe the best product comes from the best approach. We want to make an impact on peoples plates and their wider lives by inspiring a better way to deliver the future of food production.

Premium taste credentials are built on real substance

Innovation always at the core to ‘find better way’

People will value a product with integrity

The MCA story is built around our impact on planet earth

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AQUNA COD IS NOT A COMMODITY IT’S A LUXURY FOOD PRODUCT

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Positioned to command higher margins

Top chefs (Domestic and International) have commented it’s the “best freshwater fish in the world”

No commercial fishing of Murray Cod allowed within Australia

Murray Cod does not grow anywhere else in the world or Australia ( just the Murray Darling Basin)

Few alternative commercial farms of any significance

One of the rarest and best tasting fish in the world

Quality influenced by unique technology and IP used in production system

PRODUCT DIFFERENTIATION SAME MARKET ON SAME DAY IN MELBOURNE April 2017

Competitor’s Fish Recirculating Aquaculture Systems Produced Fish.

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Aquna Cod

MCA Pond Grown fish – Now Branded Aquna

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GLOBAL RECOGNISED PATNER

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“

HESTON BLUMENTHAL

MCA Shareholder & Advocate

We are delighted to be working with MCA. The innovative way they have created a luxury fish product by combining natural processes evolved over millions of years with cutting edge technology aligns with the way I approach food and cooking, resulting in fantastic quality.”

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BARRIERS TO ENTRY

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Murray Cod is unique to Murray Darling River System. These fish grow in any other river system in the world.

Commercial fishing in the river system is prohibited, listed by Environment Protection and Biodiversity Conservation Act as Vulnerable*.

• http://www.environment.gov.au/cgi-bin/sprat/public/publicspecies.pl?taxon_id=66633

Brood stock difficult to source – regulated by licensing.

Ideal environmental growing conditions are limited to the Murray Darling basin.

Intellectual property of “cage/pond system” is unique.

Limited spawning production facilities in existence.

The region’s availability of good quality water and land suitable for dam construction make it unique.

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LIMITED COMPETITION

Market is in infancy stage with existing production limited to small scale private enterprises and “backyard” producers (Except for MCA).

It was estimated in 2018, aquaculture production of Murray Cod was less than 265 tonnes per annum in NSW*.

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• http://www.dpi.nsw.gov.au/__data/assets/pdf_file/0004/638068/aquaculture-production-report-2017-2018.pdf

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Re-introduction of Cod in Australia to raise market awareness is showing significant increases in demand by consumers.

Quality and taste of Aquna cod is better than wild caught fish due to technology and innovation.

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LOCATION ADVANTAGE

Irrigation supply network of Murrumbidgee Irrigation Area (MIA)

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www.mirrigation.com.au

Benerembah Irrigation District Wah Wah Irrigation District Storages or wetland Mirrool Irrigation Area Yanco Irrigation Area Irrigation supply canals Tabbita Irrigation District Murrumbidgee Irrigation Area Major roads Wah Wah Stock & Domestic River or creek Area Towns

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Aquna Murray Cod – Premium White Flesh

Unique to Murray Darling Basin of Australia.

No wild catch to compete with.

No other significant farms to compete with.

Wholesale price $23$25/kg*

OTHER MAJOR FARMED SPECIES IN AUSTRALIA

Barramundi – White Flesh

Widely Spread throughout Northern Australia and Asia.

22,000 tonnes pa consumed in Australia*.

2,000 tonnes pa wild caught.

5,000 tonnes pa farmed in Australia.

15,000 tonnes pa imported from South East Asia.

Wholesale price $8- $10/kg

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Salmon – Pink Flesh

Wild fish are spread around Northern Hemisphere.

60,000+ tonnes of production in Australia (Tasmania).

Large Wild Catch worldwide.

Farmed in Northern and Southern Hemispheres (Norway produces est 1.2 million tonnes).

Wholesale price $12-$14 kg*

• Based on HOG equivalent

BUSINESS MODEL

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35mm Stock is kept in recirculated Cages Sold
Hatchery Nursery tanks with environment to Contract
controlled until 100 grams in
Growers
size
Fingerlings
Fingerlings
sold to Contract
to MCA
Growers for
In 18 Mths 1.5-2Kg
ponds for
Murray Cod is grow-out est.
grow-out
harvested by MCA @ $4 each
Distributor
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NUMBERS – THE BASICS

Current number of fish in stock 1.5 million

Premium ’Aquna’ Murray Cod Sale Price

$18.00 - $22.00 per KG*

$7.70 per KG

Growing Cost

Processing & Selling Costs

$1.50 per KG

Gross Profit Margin

~50%

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AVERAGE SALE WEIGHT 1.66KG

Current Pond Stock is 850,000 fish Targeting 10 thousand tonnes by 2030

Adding Contract growers is not a current priority

Economies of scale are continuing to lower production cost

Next Development site to hold 1.6 million fish in ponds

Currently exporting to USA, Hong Kong, Japan, Singapore, with Europe expected in August

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SMOKED FISH – SALES GROWTH AND MARGIN

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High Fat Content with white flesh creates a luxury smoked product

Production currently outsourced with in house Processing facility currently underway – completion expected August 2019

Potential to process more than half current production capacity

Europe smoked salmon demand is 300,000 tonnes pa

US smoked salmon demand is growing at 13% pa

There is very little high quality white fleshed smoked fish available in the world

Increase value add and margin over fresh fish

Expand Brand outside fresh fish

Logistics – 6 week shelf life when refrigerated

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RESEARCH AND DEVELOPMENT

Genetic Improvement

• Aquna Cod targeted to be a “sub species” just like Wagyu beef or Angus beef

• Improve growth rates

• Improve fillet recovery

Feed Production

• Currently using a feed designed for barramundi

• Expecting to introduce “in house” ration to improve Feed Conversion Ratio and quality

Product Value Adding

• Fish Fat, skin products, fish stock

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Stocking Densities

• Recent detailed analysis and experience has increased from 2,500 to 4,000 fish per pen

• Now Dynamic Stocking could improve throughput of existing infrastructure by as much as 2 to 3 times

Fingerling Husbandry

• In house capability removes the bottleneck of a nursery

Energy Efficiency

• Solar, better pumps and aerators, Stock management

• Technological monitoring and alarms limit exposure to potential mortality events

Pinot Gris? Riesling? Sauvignon Blanc?

NO it’s Aquna Fish Stock!

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SUMMARY

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Global consumption of fish is rising while wild catch is falling. Aquaculture must grow!

Strong demand and premium pricing for the Aquna Cod.

Eco friendly & sustainable operations supported by Government and Environmentalists.

Presently high profit margin business with high barriers to entry.

Significant growth potential for Aquna Cod with company now having proven its capacity to grow.

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Appendix

VIEW OF OUR OPERATIONS

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Fish being Processed for market.

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Overhead view of our Bilbul Site

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Staff undertaking daily check on fish health and water quality.

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MORE OF A VIEW

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Mathew Ryan our Managing Director on the ponds.

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View of the cage systems we manufacture.

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Inside our nursery. We built most of it ourselves.

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Our Operations
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A view of our Pen Systems in Action

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FOR MORE INFORMATION Ross Anderson Chairman of Murray Cod Australia Phone +61 269 625 470 Email ross@auscod.com.au Website aquna.com

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