The CEO of Seafarms Group stepped down Friday after just seven months in the job

The surprise resignation of Mick McMahon as CEO of Seafarms Group averts a special meeting of investors on June 20 aimed solely at ousting him.

Seafarms Group CEO Mick McMahon has resigned. Picture: Aaron Francis/The Australian

The chief executive of embattled aquaculture giant Seafarms Group resigned Friday after just seven months in the job and the scuttling of a $2bn project.

The surprise move by Mick McMahon, who also served as chairman, is effective immediately and heads off a board spill on June 20 aimed at ousting him.

No successor was named to lead what is Australia’s biggest producer of farmed prawns. The Darwin-based company said in a statement to the ASX only that a new CEO will be appointed “in due course’’.

Ian Trahar, a director and the biggest shareholder in loss-making Seafarms, will now serve as non-executive chairman, resuming the job he previously held for 20 years until last November.

Mick McMahon

Mr Trahar, a Perth-based rich lister, controls 28 per cent of the company and last month sought the extraordinary general meeting to remove Mr McMahon as a director despite previously hailing him as “highly credentialed’’.

The June 20 meeting has now been cancelled.

Mr McMahon, who formerly served as CEO of the Inghams chicken group, joined the company in September and moved quickly to pull the plug on its flagship project already under construction in the Northern Territory.

The long-delayed $2bn “Project Sea Dragon’’ aimed to build the world’s biggest prawn farm, churning out up to 180,000 tonnes a year of black tiger prawns in ponds spread across 10,000ha at Legune Station.

But Mr McMahon, who was earning $1.25m a year, concluded that it was not viable, created “unacceptable risk’’ and lacked adequate debt financing.

Investors had committed more than $200m in funds over the past decade, including $92.5m raised last year, to build the first stage. Nearly $135m had also been committed by the NT, WA and federal governments for infrastructure upgrades, mainly roads.

Yet increased steel and copper prices meant the build cost for the enormous prawn farm had blown out to more than $400m.

Mr McMahon had recommended that a scaled down “pilot project’’ be adopted over the next three years but it’s unclear now whether that will proceed.

In the meantime, Seafarms will continue to rely on its operations in north Queensland, where it has raised and processed prawns under the banner of Crystal Bay Tiger Prawns since 1988.

But it continues to suffer from a substantial fall in volume and huge losses, including a $36.8m net loss in the December half and $25.7m of red ink in the last financial year.

The business has been cash negative in seven of the past eight years.

Originally published as The CEO of Seafarms Group stepped down Friday after just seven months in the job