Zenabis Provides Operations Update and Highlights for December 2019


Ryan Allway

February 6th, 2020

News


VANCOUVER, Feb. 5, 2020 /CNW/ – Zenabis Global Inc. (TSX: ZENA) (“Zenabis” or the “Company“) is pleased to provide an update on its recent facility construction and licensing activities, sales and marketing highlights and recent cannabis production results.

December 2019 delivered our largest-ever harvest. This completes a whole year of successful harvests from Zenabis Atholville, since the creation of Zenabis Global Inc. In that time, we have increased Atholville monthly harvest yields by 800%, which is an amazing achievement by the entire Zenabis team,” said Kevin Coft, Chief Executive Officer of Zenabis. “Of the total 2019 Atholville harvest figure of nearly 20,000 kg, 20% was harvested just in December. This shows us what steady-state cultivation and production at Atholville can deliver. We are looking forward to achieving steady-state production at Langley with more license amendments in progress.”

“We also realized strong indicative demand from our provincial partners in December, resulting in our largest-ever volume of units shipped in the month. We are excited about what 2020 will bring,” continued Mr. Coft.

Cannabis Production Summary

In December 2019, Zenabis realized a total harvest weight of 3,841 kg of dried cannabis.

The amount harvested at Zenabis Atholville for the twelve months ending December 2019 outperformed the revised design capacity of the flower rooms by 0.93%, harvesting a total of 19,420 kg of dried cannabis. A month-to-month comparison of actual harvests compared with harvest forecast based on the revised design capacity for the last twelve months for Zenabis Atholville is provided in the table below.

Revised Design Capacity
Performance at Zenabis
Atholville

Jan

2019

Feb
2019

Mar
2019

Apr

2019

May

2019

June

2019

July

2019

Aug
2019

Sept

2019

Oct

2019

Nov

2019

Dec

2019

Total

Actual Harvest Weight (kg)

474

480

518

809

908

756

1,238

1,912

2,089

3,586

2,810

3,841

19,420

Revised Design Capacity
Harvest Weight (kg)1

467

643

539

796

895

716

1,097

1,357

1,715

3,601

2,940

4,476

19,242

Difference (kg)

7

(163)

(21)

13

13

40

141

555

374

(15)

(130)

(635)

179

Difference (%) – Revised
“Performance Ratio”

1.5%

(25.3%)

(3.9%)

1.6%

1.5%

5.6%

12.9%

40.9%

21.8%

(0.4)%

(4.4)%

(14.2)%

0.93%

1

The Revised Design Capacity Harvest Weight was derived by converting the actual square footage of flower room space and the forecast canopy for each specific flower room into a kilograms per room per day figure based on Zenabis’ historical yield data at the Zenabis Atholville facility based on the yield performance in the three months ending June 2019 for revised Design Capacity. The Revised Design Capacity Harvest Weight in the table above is the harvest weight that would have resulted if the Design Capacity Yield Per Day for a room was multiplied by the Effective Flower Room Equivalent Days, as defined under “Performance Ratio”.

In December 2019, Zenabis completed 23 harvests at Zenabis Atholville. Zenabis did not complete any harvests at Zenabis Langley or Zenabis Stellarton.

Harvest Forecast – Zenabis Atholville, Zenabis Stellarton and Zenabis Langley Site A – Part 1

The following table sets out Zenabis’ estimated aggregate monthly harvest for Zenabis Atholville, Zenabis Stellarton and Zenabis Langley Site A – Part 1 from September 2019 to January 2020.

Sept

2019

Oct

2019

Nov

2019

Dec

2019

Jan

2020

Total

Forecast (kg)3

1,731

3,758

3,881

4,2002

3,576

17,146

Actual (kg)

2,089

3,586

3,332

3,841

12,848

2

Zenabis calculates the Revised Design Capacity Harvest Weight based on a continuous harvest cycle. A variance between the Forecast and Revised Design Capacity Harvest Weight for Zenabis Atholville would be a result of a variance in the average continuous flower days during the month.

3

This forward-looking estimate of future harvest results is based on the following material assumptions: (1) Zenabis Stellarton operates at the published design capacity on a room by room basis for the cultivation space that is licensed and in cultivation at the forward-looking periods noted; (2) Zenabis Atholville rooms operate based on the current flower schedule and continue to achieve revised Design Capacity.

Construction and Facility Licensing Update

Zenabis Langley

Zenabis Langley Part 1 and Part 2A are licensed and operational. Zenabis Langley Part 2B is substantially complete and the license amendment was submitted in December 2019. After reviewing the construction and licensing progress of Zenabis Langley, Zenabis decided to amend the Part 2B license amendment submission further to include more square footage that was originally intended for Part 2C. This includes an increase of approximately 2,500 sq. ft. of flower space and 18,000 sq. ft. of operational space which includes drying rooms and packaging rooms. Construction of Zenabis Langley Part 2C is ongoing but at a reduced pace as the Company’s focus for Zenabis Langley is for the existing licensed or substantially completed space to achieve operational excellence and operate at a steady state.

A summary of construction status by phase is provided below:

Phase

Design Capacity

Description

Part 1

9,900 kg

•  Licensed and operational

Part 2A

39,400 kg

•  Licensed and operational

Part 2B

14,800 kg

•  Consists of 40,500 sq. ft. of flower room space (one flower room) and
18,000 sq. ft. of other operational spaces (includes drying rooms and
packaging rooms)

•  Substantially complete

•  License amendment submitted in December 2019

Part 2C

32,000 kg

•  Consists of 82,200 sq. ft. of flower room space (two flower rooms) and
86,300 sq. ft. of other operational spaces (includes drying rooms,
packaging rooms, mother space and vegetation space)

•  HVAC, flooring and shade screen installation is ongoing

•  Security equipment and lighting installation is substantially complete

Zenabis Stellarton

Zenabis has submitted a sales license application for Zenabis Stellarton and expects to use this site as a fulfilment centre and packaging/processing facility upon receipt of this license.

Zenabis Delta

As the Company continues to focus on becoming cash flow positive, the further conversion of Zenabis Delta is under review to assess whether its analytical and laboratory services are justified by market demand. Zenabis is also considering other plans for the Delta facility if it determines market demand is insufficient.

Licensing Update

Zenabis is currently in the process of various licensing applications for Zenabis Delta, Zenabis Langley, Zenabis Stellarton and the Zen Craft Grow program as outlined in the table below:

License Submission

Submission Month

Annual Design Capacity

Zenabis Delta – Analytical Testing

May 2019

N/A

Zen Craft Grow – Grower 1

July 2019

350 kg

Zenabis Stellarton – Sales License

October 2019

N/A

Zenabis Langley Site A – Part 2B

December 2019

14,800 kg

Zenabis Langley Site A – Part 2C

TBD4

32,000 kg

4

Expected submission timeline subject to receipt of prior license or license amendment for each facility.

Sales and Marketing Update

Compassionate Pricing Program

To increase medical patient access to cannabis products, and to compete with the illicit market, Zenabis will be lowering its medical cannabis pricing across the board for all applicable medical patients and is offering compassionate pricing on cannabis products including dried flower and cannabis oil products for qualifying customers through its Compassionate Pricing Program.

About Zenabis

Zenabis is a significant Canadian licensed cultivator of medical and recreational cannabis, and a propagator and cultivator of floral and vegetable products. Zenabis employs staff coast-to-coast, across facilities in Atholville, New Brunswick; Delta, Aldergrove, Pitt Meadows and Langley, British Columbia; and Stellarton, Nova Scotia. Zenabis currently has 96,400 kg of licensed cannabis cultivation space and four licensed facilities. Zenabis has 3.5 million square feet of total facility space dedicated to a mix of cannabis production and cultivation and its non-cannabis propagation and floral business.

Zenabis expects its Zenabis Atholville, Zenabis Stellarton and Zenabis Langley facilities to be in steady state production in 2020. The Zenabis brand name is used in the cannabis medical market, the Namaste, Blazery, and Re-Up brand names are used in the cannabis adult-use recreational market, and the True Büch brand name is used for Zenabis’ kombucha products.

Forward Looking Information

This news release contains statements that may constitute “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information may include, among others, statements regarding the future plans, costs, objectives or performance of Zenabis, or the assumptions underlying any of the foregoing. In this news release, words such as “may”, “would”, “could”, “will”, “likely”, “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate” and similar words and the negative form thereof are used to identify forward-looking statements. In this news release, forward-looking statements relate, among other things, to: the projected kilogram yield of licensed facility space and facility space in the process of, or scheduled for, construction and/or licensing; our expectations for future harvests; the expected timing and completion of current and planned conversion, expansion and optimization of our facilities, including Zenabis Langley; the expected submissions of license amendment applications and site evidence packages; the licensing of our facilities and projected timing thereof; our expectations for our extraction projects, equipment and capacity; our expectations for processing output; the pricing for our compassionate pricing program  and the expected content of future operational updates. Forward-looking statements should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether, or the times at or by which, such future performance will be achieved. No assurance can be given that any events anticipated by the forward-looking information will transpire or occur. Forward-looking information is based on information available at the time and/or management’s good-faith belief with respect to future events and are subject to known or unknown risks, uncertainties, assumptions and other unpredictable factors, many of which are beyond Zenabis’ control. These risks, uncertainties and assumptions include, but are not limited to, those described in the shelf prospectus dated April 9, 2019, a copy of which is available on SEDAR at www.sedar.com and could cause actual events or results to differ materially from those projected in any forward-looking statements. Furthermore, any forward-looking information with respect to available space for cannabis production is subject to the qualification that management of Zenabis may decide not to use all available space for cannabis production, and the assumptions that any construction or conversion would not be cost prohibitive, required permits will be obtained and the labour, materials and equipment necessary to complete such construction or conversion will be available. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release. Zenabis does not intend, nor undertake any obligation, to update or revise any forward-looking information contained in this news release to reflect subsequent information, events or circumstances or otherwise, except if required by applicable laws

For more information, visit: https://www.zenabis.com.

SOURCE Zenabis Global Inc.

For further information: Media Relations: Email: [email protected], Phone: 1-855-936-2247; Investor Relations: E-mail: [email protected], Phone: 1-855-936-2247

Related Links

www.zenabis.com

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Ryan Allway

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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