AgraFlora Organics International Inc.
(“
AgraFlora” or the
“
Company”) (
CSE: AGRA) (Frankfurt:
PU31) (OTCPK: AGFAF) is pleased to report that it has
closed the acquisition of Sanna Health Corp.
(“
Sanna”), originally announced on December 5,
2019. Sanna is a Canadian cannabis company based in the Greater
Toronto Area (GTA) which holds a standard cultivation, standard
processing, and medical sales licences awarded under the Cannabis
Act.
ABOUT SANNA HEALTH
EXTRACTION
Sanna is headquartered in the GTA, only 30
minutes from downtown Toronto, affording the Company access to
Canada’s largest cannabis marketplace. Sanna’s flagship facility is
situated on 16 acres and includes 27,000 square feet of Health
Canada licensed cultivation and processing space. Sanna holds an
option to expand its current production area to 89,000 square feet,
as well as ample commercial-industrial space for future
expansion.
With ethanol extraction equipment installed
on-site and high-margin agreements being negotiated to process
upwards of 1,000 kg of hemp biomass per month, Sanna is primed to
realize sustainable, near term cash flows. The Company forecasts
that once optimized and upon receipt of the required licence
amendment, Sanna’s extraction facility will boast annual extraction
capacity of 250,000 kilograms of dried cannabis and hemp biomass,
much of which will be supplied by the Company’s 88-acre outdoor
cannabis grow located less than 90 minutes from its GTA
headquarters, permitting streamlined logistics and reduced
transportation costs.
OUTDOOR CULTIVATION
Sanna owns an 88-acre late-stage Health Canada
outdoor cultivation applicant. The Company plans to submit its
affirmation of readiness and video evidence package for its initial
13-acre Zone One outdoor immediately following closing of the share
exchange, in preparation for the 2020 outdoor cultivation
season.
Located in Southwestern Ontario, Sanna’s Zone
One 13-acre outdoor grow is forecast to produce up to over 1,000 kg
per acre of high-quality, low-cost cannabis flower, with a per gram
unit contribution of less than $0.10. Sanna’s planned Zone Two
outdoor grow expansion will add an additional 75 acres of
cultivation expanse and once licenced is expected to yield over
75,000 kg of dried cannabis per harvest.
The Company will deploy proprietary varietals of
auto-flower and photoperiod cannabis seeds on its 88-acre outdoor
grow, thus optimizing production yields. Sanna will also leverage
various cultivation and plant physiology concepts with the
objective of enhancing plant performance. The Company's cultivation
concepts have been developed over five years of Canadian commercial
cultivation experience and include:
- Proprietary soil/nutrient monitoring and plant health
monitoring solutions;
- Consistent delivery of ideal primary, secondary and
micronutrients;
- Evaluation and comprehension of the rhizosphere and its effect
on inputs and yield;
- Creation of crops that are more resistant to pests and disease;
and,
- Manipulation of nutrient and substrate conditions to drive
plant health and yield.
Once operational, and in receipt of Health
Canada approval, the true value of the Company’s outdoor grow will
be realized via its ability to serve as a robust feedstock source
for the multiple downstream value-added assets that are domiciled
under the AgraFlora corporate banner. The successful implementation
of full vertical integration will support increased efficiency
across business channels and allow for maximum economic margin
capture for the enterprise as AgraFlora continues to capitalize on
the next phase of cannabis normalization.
Cash cost per gram to harvest includes all
operating expenses such as labour, supplies, consumables, services
and staff overhead. All-in cash cost per gram to harvest includes
all operating expenses, along with capital costs including
irrigation, security infrastructure, as well as the contemplated
drying facility.
The Company’s 2020 harvest will be dried and
cured on-site at a dedicated drying building comprising
approximately 5,000 square feet and featuring a 20-foot-high
ceiling and a purpose-built climate control and dehumidification
system to maximize throughput efficiency.
DISTRIBUTION
Sanna currently has memorandums of understanding
in place with established cannabis retailers, including Canna
Cabana by High Tide Inc., and Delta 9 Cannabis. In aggregate, Canna
Cabana and Delta9 will boast 45 licensed, high-traffic
brick-and-mortar retail locations across Canada by Q1 2020.
The Company will also pursue formal supply
agreements with said retailers, to be finalized throughout the
first quarter of 2020, including annual minimum purchase
conditions, as well as strategic marketing cooperation initiatives.
Leveraging its medical sales license, Sanna anticipates the launch
of its direct-to-patient ecommerce site during Q2 2020.
The Company will architect and construct a 1,500
square foot on-site dispensary at its licensed, 16-acre GTA
location; capitalizing on the 7 million plus population within a
60-minute radius; one of the largest markets in North America. The
GTA is Canada's largest metropolitan area, affording the company a
lucrative opportunity to capture a significant market share in
Canada’s largest cannabis marketplace.
Sanna’s planned on-site dispensary will also
amplify the Company’s vertically integrated mandate by coupling a
high-traffic retail footprint and continuing brand presence with
existing cultivation, processing and extraction capabilities.
Pursuant to the terms of a definitive share
exchange agreement (the “Agreement”) among the
Company, Sanna, and Sanna’s shareholders, the Company acquired all
of the issued and outstanding shares in Sanna in exchange for the
issuance of 76,666,666 common shares of the Company (the
“AGRA Shares”) at a deemed price of $0.30 for
total aggregate consideration of $23,000,000. The Agreement further
provides that the Sanna shareholders (each, a “Restricted
Person”) receiving the AGRA Shares will be subject to a
staged 18 month lock up, whereby one-third of the Restricted
Person’s AGRA Shares will become free trading 6 months following
closing, one-third will become free trading 12 months following
closing, and the final one-third will become free trading at the
earlier of 18 months following closing and the date on which Sanna
receives (by way of its wholly owned subsidiary) a cultivation
licence, as issued under the Cannabis Act, in relation to its
proposed cultivation facility located in Binbrook, Ontario.
About AgraFlora Organics International
Inc.
AgraFlora Organics International Inc. is a
growth oriented and diversified company focused on the
international cannabis industry. It owns an indoor cultivation
operation in London, ON and is a joint venture partner in
Propagation Services Canada Inc. and its large-scale 2,200,000 sq.
ft. greenhouse complex in Delta, BC. The Company is also
retrofitting a 51,500-square-foot good manufacturing practice
(“GMP”) edibles manufacturing facility in Winnipeg, Manitoba.
AgraFlora has a successful record of creating shareholder value and
is actively pursuing other opportunities within the cannabis
industry. For more information please visit: www.agraflora.com.
ON BEHALF OF THE BOARD OF DIRECTORS
Brandon Boddy Chairman & CEOT: (604)
398-3147
For additional information:
AgraFlora Organics International Inc. Tim
McNultyE: ir@agraflora.com T: (800) 783-6056 |
For French inquiries: Remy
Scalabrini, Maricom Inc.E: rs@maricom.ca T: (888)
585-MARI |
The CSE and Information Service Provider have
not reviewed and does not accept responsibility for the accuracy or
adequacy of this release.
Forward-looking Information Cautionary
Statement
Except for statements of historic fact, this
news release contains certain "forward-looking information" within
the meaning of applicable securities law. Forward-looking
information is frequently characterized by words such as "plan",
"expect", "project", "intend", "believe", "anticipate", "estimate"
and other similar words, or statements that certain events or
conditions "may" or "will" occur. Forward-looking statements are
based on the opinions and estimates at the date the statements are
made, and are subject to a variety of risks and uncertainties and
other factors that could cause actual events or results to differ
materially from those anticipated in the forward-looking statements
including, but not limited to delays or uncertainties with
regulatory approvals, including that of the CSE. There are
uncertainties inherent in forward-looking information, including
factors beyond the Company’s control. There are no assurances that
the business plans for AgraFlora Organics described in this news
release will come into effect on the terms or time frame described
herein. The Company undertakes no obligation to update
forward-looking information if circumstances or management's
estimates or opinions should change except as required by law. The
reader is cautioned not to place undue reliance on forward-looking
statements. Additional information identifying risks and
uncertainties that could affect financial results is contained in
the Company’s filings with Canadian securities regulators, which
are available at www.sedar.com.
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