A new review prepared for Seafarms Group found no technical reason why its Territory aquaculture development Project Sea Dragon should not proceed, despite incurring a huge $85.4 million loss for the 2021-22 financial year and an earlier review raising viability issues with the project.

The project had been placed on hold following a different internal report in March that found it would not generate “acceptable” financial returns and involved too much “unacceptable risk” to continue.

However, the newest review presented to the board at Seafarms’ annual general meeting last week reached a different conclusion.

“A new assessment validated the effectiveness of large-scale prawn farms, hatcheries and packing and importantly the viability of 10-hectare ponds,” said Seafarms CEO Rod Dyer at the company’s meeting.

“After visiting overseas operations, the company believes that the previously identified technical risks can be managed.

“Seafarms is now progressing financial and business case modelling. We are well advanced in discussions with potential funders. The Board will assess the updated business case and funding arrangements before deciding on the future direction of Project Sea Dragon.”

Seafarms said in a statement that the new operations management team has put in place modifications to water systems as well as operating procedures that effectively mitigated the previously identified risks.

“The product has been trialled in Europe with good market feedback, and now looking for more products to keep building the market. Financial model and business case incorporating updated construction cost and operating cost inputs are currently being prepared,” the statement read.

For the financial year 2021-2022, Seafarms recorded an $85.4 million loss brought about by the stalled Territory aquaculture development. The loss is more than three times the $25.7 million loss the company posted for the financial year 2020-2021.

Seafarms had previously attracted more than $100 million in government spending to build roadways to support the project after it planned to devote $1.1 billion to build the biggest prawn breeding farm in the world, located at the Legune Station, 340km southwest of Darwin.

Several issues came out in the March review of the project concluding that the project is not viable, carried unacceptable risks and does not have adequate debt financing.

A large percentage of work on the project was already made under the company’s former CEO Mick McMahon who resigned after just seven months on the job.

Mr McMahon’s recommendation to stop the project due to non-viability, however, ran in conflict with major shareholder Ian Trahar who controls 28 per cent of the stock and called an extraordinary general meeting to have Mr McMahon removed. The move followed the resignation of the company’s chief financial officer Ian Brannan.

Seafarms board is expected to make a decision on whether to proceed with Project Sea Dragon early in the new year.