THC Global Acquires Canadian Cannabis Site – +$200m revenue potential
Ryan Allway
March 26th, 2019
News
Key points:
- Vertical Canna, THC Global’s wholly owned Canadian subsidiary has acquired a site in Nova Scotia, Canada – project to develop Licenced Cultivator status in Canada
- Funding of project intended to be debt and hybrid facilities with limited outlay by THC Global
- Two stage project – Stage 1 profit generating cannabis cultivation followed by Stage 2 highvalue-add production capabilities
- Stage 1 initial annual yield expected to be 37,000kg dried cannabis flower per annum
- Stage 1 annual production yield revenue estimate of C$273 million (approx. A$287 million) givencurrent Canadian cannabis price of C$7.12 per gram
- Negotiations ongoing for product off-take agreements at both stages of production
THC Global Group Limited (THC Global) (ASX:THC) has completed the acquisition of a Canadian company in the process of becoming a Licenced Cultivator at a site in Nova Scotia, Canada through THCGlobal’s wholly owned Canadian subsidiary, Vertical Canna.
THC Global intends to stage the development of the project with first stage focussed on delivering profitability in the near term, with an expected 37,000kg annual dried cannabis flower production volume. Additional development to see both increase in cultivation capacity as well as on site processing capability to create high value-add cannabis products for the Canadian market.
The current price of cannabis in Canada is C$7.12 per gram (A$7.48 per gram) hence the Company’s37,000kg annual production volume will be worth an expected C$273 million (approx. A$287 million).
THC Global also has an Australian cannabis facility in development in Northern New South Wales, which when completed, will produce an additional 50,000kg of dried cannabis flower. Total production volume ofdried cannabis flower only across THC Global’s three cultivation projects when completed and in production will be in excess of 88,000kg per annum without considering new agricultural technologies THC Global is exploring to rapidly increase yield per square metre of land. The Company intends to use some of this biomass for processing at the Company’s bio-phamaceuticals extraction facility in Queensland (Australia) into medicinal cannabis products.
THC Global has advised that it is seeking to fund the development of the Canadian project through debt and hybrid facilities, reducing the requirement of further upfront capital outlay from the Company, and recognising the significant profitability expected from the project.
Off-take agreements to secure forward revenues at both production stages have already commenced in addition to discussions with other commercial partners to maximise profitability of the project.
Chief Executive Officer, Ken Charteris, commented:
“THC Global entering the Canadian cannabis market as a local producer is significant step in itsglobal strategy. Our near term focus is to ensure profitable cultivation activities, leading into even higher value-added production after delivering significant profitability”.
THC Global also advised that it has appointed Jonathon Inkley, a construction and project management expert with significant experience in the Canadian cannabis sector as a director of Vertical Canna, theCompany’s Canadian subsidiary. Jonathon’s experience includes roles working with ExxonMobil Canada, and Imperial Oil. Jonathon is additionally a Chartered Professional Accountant (CPA) and a Chartered Management Accountant (CMA) in Canada and holds an MBA from the University of Iowa.
Jonathon’s remuneration includes various performance-based options with milestones based on the development of the Nova Scotia site within Vertical Canna to a minimum of C$250,000 in monthly revenue before October 2020, with exercise prices for the options ranging from $0.80 to $1.20 being significant premiums to the current market price of THC Global.
THC Global Group Limited (ASX: THC)
THC Global operates under a ‘Farm to Pharma’ pharmaceutical model and is currently delivering high quality medicinal cannabis products to Australian patients through existing access schemes. Having secured both a significant growing capacity over two grow sites, and an industry-leading pharmaceuticals biomanufacturing facility with attached testing and product development laboratory, THC Global is in prime position to service both domestic patients and the export market.THC Global’s commercial partners operate across four continents, supporting future international growth.
In addition to its core medicinal cannabis business, THC Global owns two Canadian companies, being Crystal Mountain Products and Vertical Canna Inc. Crystal Mountain Products operates a revenue generating global hydroponics retailer and distributor of equipment, material, and nutrients to cannabis growers and producers. Vertical Canna Inc is an investment vehicle through which THC Global intends to build, through acquisitions and strategic partnerships, a vertically integrated Canadian cannabis producer and retailer. Vertical Canna’s existing asset portfolio includes a land-holding in Nova Scotia, Canada to be developed into a large-scale cannabis production facility.
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This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.
About Ryan Allway
Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.
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