Project Summary

Introduction

The principal objective of the project is to grow Russian sturgeon with the purpose of selling meat and value-added products wholesale to the restaurants, hotels and retail stores nationwide. After 7 years, the project will enter its second stage, the objective of which is to produce, process, package, and sell Russian caviar.

The global scarcity of caviar and recent developments in the Caspian Sea provide a very high demand for this product and guarantee a broad market for it.

Process

Primary material from Russian sturgeon (eggs, fry) will be imported from Russia and Eastern Europe. Beginning with fertilized eggs, the life cycle of sturgeon will be compressed to about 7-9 years by culture in controlled environmental conditions.

Initially fry will be grown for meat production at market size of 10-15 lbs over the period of 30-36 months. Female candidates for caviar production will be selected from meat production stream and grown for additional 4-6 years when the females become sexually mature and produce caviar. A small select number of caviar production fish will be retained as broodstock for further production thereby closing the biological cycle of the fish within the facility.

Facility

The proposed facility (approximately 220 acres) is located in North Florida, where environmental conditions are satisfactory for growing sturgeon. The project envisions gradual development of a fish production inventory of about 1.7 mln lbs by the 6th year of the project, including younger fish for meat production and selected female fish for caviar production. This inbentory is capable of sustaining the production of 160 tons of sturgeon meat and 35,000 lbs of caviar per year.

The physical components of the facility include:

• A hatchery for incubation and hatching of eggs and rearing of fish fry
• A series of indoor tanks in which fish are reared from fry to a size sufficient for stocking in meat production tanks
• Larger outdoor tanks (50 feet in diameter, approximately 70,000 gallons in volume) for meat production where fish are grown from a juvenile size to market size
• Similar large tanks that are allocated for rearing selected females to a size sufficient to produce caviar
• Specialized tanks for broodstock development, which are located adjacent to the hatchery building.

Economics

The most important economic factor in structuring the project is to arrive at early cash flow from the sale of sturgeon meat and other products. This cash flow is used to finance the later stages of project development and create the caviar production fish inventory. The largest single financial component of the venture is the working capital invested in creating a sustainable caviar production fish inventory.

Investment

The investment consists of three major components:

• $460,000 for acquisition of the project site
• $3.9 mln for capital improvements and equipment
• working capital of $3.1 mln

The total projected investment required is about $5.4 mln. The items above total an amount larger than the projected investment because early income from meat sales is re-invested in project development. Project financial plan anticipates a 32.6% return on investment over a 12-year project span.

The potential risks of the project include catastrophes such as hurricanes and other natural events, changes in market conditions, fish diseases and management error. We believe that these risks are mitigated by a conservative plan for project implementation and by our intention to employ the best technology and management personnel available.

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