The Farm to pharma pharmaceutical company, THC Global Group Limited (ASX: THC) reported to the ASX that its 100 percent owned subsidiary, Vertical Canna has completed the acquisition of 10034622 Canada Inc, a Canadian company.
The shares of the company closed the day’s session, around 5 percent up on ASX (as on 26 March 2019). The shares were trading on the ASX, post the lifting of the trading halt requested by THC on 25 March 2019.
This strategic acquisition would help the company enter the Canadian cannabis market as a licenced cultivator and this acquisition would also open new opportunities for THC global in the future. The company anticipates the first stage production from the location, to yield high-quality cannabis flower. The same is planned for sale into the Canadian medicinal and recreational markets. The company reportedly has plans for higher value-add production capabilities. Further, the company has plans to be a licenced processor and seller.
THC informed the exchange that the initial stage facility is expected to have a footprint of approximately 1,850 sqm, vs. the total size of the land, acquired by the Vertical Canna is approximately four acres. The additional capacity should help the company scale its operations at this location. The first stage development is reportedly expected to yield 37,000 kg of dried flower annually. Further, the company also stated that it is in discussions with technology associates to develop a higher yield from the facility.
On the project funding side, the company is considering mix of hybrid and debt facilities within its subsidiary, aiding THC global to finish the project, and enable revenue-generating production with limited initial capital.
The CEO, Mr Ken Charteris, of THC considers the company entering the Canadian market in the form of a local producer as an important stage in the company’s worldwide ambitions. He expects near term profitability from the first stage of the project.
The company also highlighted that Vertical Canna had appointed Mr Jonathon Inkley to its Board. Mr. Inkley is reportedly a highly experienced project manager and business development expert.
The company’s purchase of 10034622 Canada Inc (applicant for the licenced cultivator status and holding company for Nova Scotia Property) is funded by combination of 450,000 shares in THC Global and C$200,000. The newly appointed board member Mr. Jonathon Inkley is another vendor of 10034622 Canada Inc, and he would receive 50 percent of the purchase price. The 450,000 shares are subject to a voluntary holding restriction until 25 September 2019.
The stock has delivered a YTD return of 15.96%. In the past six months, it has provided a return of 5.83%. However, in the past three months, the stock has been in a decent uptrend providing a return of 21.11%.
The shares of THC closed at A$0.575 on ASX (As on Tue 26 March 2019) up by 5.505% as compared to its previous day close.
THC has a market capitalization of $69.37 million. The ASX reported average trading volume is 126,381. The company’s EPS stood at -0.069 AUD, As per the latest ASX update.
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