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Announcement

GENERAL: SEA: Market Update

01 Sep 2017 11:49NZX
NZX / MEDIA RELEASE       1
September 2017

Market Update

SeaDragon Limited (NZX:SEA) wishes to provide an update on current market
conditions for its refined Omega-3 fish oil.

As announced to the market on 19 June 2017, we identified some minor
deficiencies and related process improvements that we could make to satisfy
exacting regulatory and customer specifications.  With one exception, we
believe we have addressed these deficiencies and process improvements. We
are focussed on resolving the one remaining issue affecting one quality
parameter, but in the interim, the price we can achieve is weakened. We
expect this to be a temporary situation.

A number of large international customers are still assessing oil samples,
and one has placed a second order for 32,000 kg of our refined Omega-3 tuna
oil. We expect that these orders will be become regular and ramp up over
time.

In our 19 June 2017 announcement, we also signalled that recent changes to EU
quality standards may limit our ability to secure orders from some customers
selling into the European market in the short-term. We see this as creating a
temporary barrier to entry to a key market where demand for high DHA tuna oil
for infant formula is strong.  We are currently implementing several process
changes to our plant that we believe will assist us to meet these new EU
requirements in the short-term.

In the meantime, we are addressing alternative markets, and in particular,
China, where we have had strong interest for refined Omega-3 oils, but have
not previously been able to supply to the required regulatory standards. We
believe that we are now in a position to be able to supply oil into China,
and are in the process of sending sample batches to potential customers.

The global market demand for DHA remains strong, but we are seeing some
market erosion from surplus DHA created from concentrated anchovy oil,
particularly in the EU markets.   We have also seen more algal DHA becoming
available as some of the key patents expire, which mostly affects the North
American market. We believe that SeaDragon remains competitive however, as
the price point for algal DHA is significantly higher than our oil.

Overall, we have made significant steps forward in reaching the exacting
standards required by potential international customers, and by their
regulatory authorities, but slow sales development is likely to have a
negative impact on company performance through to the end of the third
quarter. A further update will be provided at the AGM scheduled for 10 AM on
Wednesday 20th September 2017 at Mills Reef Winery, Tauranga.

For further information, contact:
Colin Groves
Chairman
Tel: +64 21 928 003

About SeaDragon: www.seadragon.co.nz
SeaDragon Limited (NZX:SEA) is New Zealand''s largest refiner and blender of
high-quality, internationally certified concentrated fish oils and fractions,
including Omega-3 oils. Our oils are sourced from fish caught in the clean
and pure waters around New Zealand, in the Southern Ocean, and elsewhere. We
have more than 20 years'' experience processing fish oils and we are
recognised for the quality and purity of our products. We supply health
supplement manufacturers around the world to meet the burgeoning demand for
pure, high-quality fish oils, which are scientifically proven to deliver
significant human health benefits such as lowering the risk of heart disease,
improving brain function and joint health. The majority of our supply is
exported.
End CA:00306585 For:SEA    Type:GENERAL    Time:2017-09-01 11:49:41
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