CropLogic Limited (ASX: CLI) is an ASX listed agricultural technology company, operating on a global scale. The company provides the growers of irrigated crops with digital agricultural technology expertise and has a market share of approximately 30% in some crops. It has also expanded into Idaho market after witnessing significant growth in Washington State and Northern Oregon.
Trial Farm Expansion
On 24th April 2019, the company announced its expansion plans. CLI has agreed on a decision to increase its Industrial Hemp trial farm in Central Oregon region, USA, from 150 to 500 acres. This will allow the company to integrate its agronomy and agtech expertise vertically.
The increase in farm’s size, will also help the company’s wholly owned subsidiary, LogicalCropping to evaluate and produce reference data for different growing conditions, the need of which is confirmed by local hemp growers. Reference data for different growing conditions include land contours, elevation in order to optimise crop yields, soil types and topography.
The production rate from each of the different growing environments over the 500 acres will be monitored by the company. According to the company, this information can also be applied to its customers outside Australia and USA region, in the global emerging industrial hemp market.
The company’s drone technology will also be utilised this season at the Industrial Hemp trial farm. It is specifically applicable to crops holding high value like industrial hemp, but interest from other clients in the Australian grape industry, along with the apple and row crop industry in Washington State had been received as well.
The company’s CEO, James Cooper-Jones stated that even though the 500 acres trial farm is quite small as compared to the 100,000 acres, which the company services in Washington State each year, the varying growing environments will serve the opportunity to further vertically integrate its agronomy and agtech expertise in a greater manner.
CropLogic expects production rates of industrial hemp biomass to be between 800,000 and 1,100,000 pounds for the entire 500 acres. The price of the hemp biomass varies depending upon the grade and variety, but the company’s recent investigation into the industry revealed prices of USD$35 and USD$45 per pound. The estimated cost of production of industrial Hemp Biomass will be around US$5 to US$7 per pound.
A$4 million in Funding Secured
The company has received firm commitments from institutional and sophisticated investors to raise $3 million (before costs). The fundraising will be done through the placement of 75,000,000 fully paid ordinary shares at an issue price of $0.04 per share. It will also issue one unquoted option for every two shares issued under the Placement. The option will be exercisable at $0.06 each, with an expiry date of two years from the date of issue. In the first tranche, around $1.7 million will be raised against the issue of 42,490,411 shares, and around $1.3 million will be raised in the second tranche against the issue of remaining 31,509,589 shares. A total of 37,500,000 Options will also be issued, subject to shareholder approval. Another A$1 million of bridging finance has been secured with a variable rate of the total loan amount not exceeding beyond 11%.
The market capitalisation of the company is A$11.86 million. The 52-week high and low of the stock is A$0.072 and A$0.011 respectively. As recorded on 24th April 2019, the stock closed the session at A$0.043, up by 7.5% compared to the previous closing (the share last traded on 17th April 2019 due to a trading halt). In the last six months, the stock has given the return of massive 81.8%, and an impressive YTD return of 207.69%.
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