Perth-based award-winning global agronomy, agtech and farm management company, CropLogic Limited (ASX: CLI) specialises in soil moisture management solutions. The company, with over 100 years of combined experience across Australia and the USA, aims to help growers optimise crop profitability by providing simple, actionable in-field information.
The company has been making waves in the ASX pot stock space through its strategic move into Hemp CBD.
Industrial Hemp Supply Agreement
Confirming that its agronomy, farm management and agtech expertise can be successfully applied to industrial hemp and has been recognised by industry participants, CLI executed a Supply Agreement in August 2019 with Deschutes Labs , a new industrial hemp processing facility located in Central Oregon, USA.
As per the Agreement, Logical Cropping LLC, CLI’s wholly owned subsidiary would deliver Biomass on a weekly allotment basis from 20 October 2019. With payments to follow each delivery, the total Supply Agreement value is reportedly $15.4 million (provided the completion of deliveries).
Logical Cropping LLC Commences Biomass Shipment
On 28 October 2019, the Company announced that shipments have begun under the Deschutes Labs supply agreement.
With the harvest timeline on track, the Company made its first Biomass Shipment under the Agreement to Deschutes Labs, which aims to offer its customers with consistent and abundant CBD products through its relationship with CropLogic. In September 2019, the Lab began operations and is licensed to manufacture food grade extracts. Further, it is operated and designed in accordance with ISO 9000 and GMP standards.
CLI notified that even though there is an element of ‘dialling in’ of machinery and processes to the extent that would be commonly expected for a project such as the trial farm, the harvest is reportedly progressing well:
- The methodology of swathing/ windrowing, field drying and combining biomass has been successful to date;
- a process of brushing after combining had been considered;
- management and buyers have been pleased with the consistency of biomass material from the combine, eliminating/reducing the need for brushing, consequently reducing the cost of brushing and streamlining the harvesting process.
Moreover, CLI’s warehousing procedure, which includes bagging the biomass into supersacks (Bulka Bags) weighing, tagging and storing for sale, is now being implemented.
The Course Of Events
- On 9 August 2019, the Company negotiated the terms for a pre-revenue bridging finance loan of US$2 million with its existing lender, Atlas Capital Markets and subsequently received the loan amount (with Pre-Revenue Hemp Trial Farm Bridging Loan conditions precedent satisfied) to use the funds towards processing and the sale of product.
- Commencing the review of Australian Industrial Hemp Trial Farm later in August, the Company signed a Letter of Intent with Boring Seed Company of Oregon USA to distribute hemp genetics into Australia and New Zealand.
- On 13 September 2019, the Company announced that the Hemp Trial Farm had entered the fourth stage of development as the plants have begun to flower, a significant milestone as it is in the flowers that the CBD producing oils are predominantly found.
- Advancing the Hemp Trial Farm activities, a third party, ORELAP performed Industrial Hemp compliance testing and confirmed that all fields under the Hemp Trial Farm have a THC level lower than the highest requirement for them to be considered industrial hemp. This demonstrated the robust growing methods and good genetics that were sourced through hemp expertise resourced by LogicalCropping.
- On 21 October 2019, CLI reported that the harvests were progressing well and according to schedule, and trimmed flower hand cutting was complete.
Share Price Information
CLI quoted $0.047 on ASX after the trade session on 30 October 2019, with a market capitalisation of $20 million and approximately 416.61 million shares outstanding. The stock has generated a return of 23.08% in the past six months and has an impressive YTD return of 269.23% (as on 29 October 2019).
Hemp industry and the cannabis space has been gaining a lot of traction since the past few months in Australia, especially after the recent ease on recreational cannabis in the ACT, which followed the historic legalisation of medicinal cannabis in February 2016.
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