VANCOUVER, May 21, 2019 /CNW/ - Zenabis Global Inc.
(TSXV:ZENA) ("Zenabis" or the "Company")
is pleased to provide an update on its recent cannabis production
figures; anticipated future harvests; facility construction and
licensing status; and medical program update.
Highlights:
- Cultivation output in April 2019
was 809 kg, which represents a 31.3% outperformance relative to
design capacity, or a Performance Ratio1 of 31.3%;
- Together with accelerating one harvest versus forecast,
cultivation output of 809 kg was 63% greater than forecast output
of 495 kg;
- The Performance Ratio on a by-harvest basis varied from a low
of (4.0%) to a high of 56.6%; and
- Construction and licensing continue to progress on track at
Zenabis Atholville and Zenabis Langley, with annual design capacity
forecast to increase to at least 131,300 kg in the third quarter of
2019.
Andrew Grieve, Chief Executive
Officer of Zenabis, stated, "Cultivation output was very strong in
the month of April. We continue to experience variance on a
room-by-room basis based on a variety of cultivation approaches
being tested. We expect this variance to continue through the month
of May. Beyond the harvests in May, aside from variance resulting
from ramp-up in rooms, we expect greater consistency in output as a
result of a more consistent cultivation approach. In addition,
licence amendments are being received in a timely manner, and our
construction and licencing teams remain on time, or in some cases
are ahead of the previously disclosed schedule."
Cannabis Production Summary
In April 2019, Zenabis had its
highest monthly harvest weight to date of 809 kg. Zenabis has
consistently grown more than the previous month's harvest weight
from October 2018 to April of
2019.
The amount harvested for the three months ending April 30, 2019 exceeded the design capacity of
the flower rooms by an average of 15%, compared to the three-month
period from January 2019 through
March 2019, during which the amount
harvested exceeded the design capacity by 11%. A month-to-month
comparison of actual harvests compared with harvest forecast based
on design capacity between January
2019 and April 2019 is
provided in the table below.
Historical
Harvests – Atholville
|
Jan
2019
|
Feb
2019
|
Mar
2019
|
Apr
2019
|
Total
|
Actual Harvest
Weight
|
474 kg
|
480 kg
|
518 kg
|
809 kg
|
2,281 kg
|
Design Capacity
Harvest Weight2
|
372 kg
|
495 kg
|
463 kg
|
616 kg
|
1,946
kg
|
Difference
(kg)
|
102 kg
|
(15 kg)
|
55 kg
|
193 kg
|
335
kg
|
Difference (%) –
"Performance Ratio"
|
27.4%
|
(3.0%)
|
11.9%
|
31.3%
|
17.2%
|
In April 2019, Zenabis achieved
four harvests at Zenabis Atholville, whereas the forecast included
three harvests, with one harvest being accelerated versus schedule.
The Performance Ratio of these harvests ranged from (4.0%) to
56.6%.
________________________
|
1
|
To better reflect the
actual performance of its facilities going forward, the Company
reports a Performance Ratio, calculated as follows: after each
harvest, Zenabis will calculate the dry weight cannabis output for
each room (the "Total Output"), taking into account the amount of
days in production through a combination of: (1) the amount of
flower room days used (including turnaround time) for that room;
and (2) the amount of flower-room equivalent days required from
other flower rooms in support of that harvest (together the
"Effective Flower Room Equivalent Days"). Zenabis will then divide
the Total Output by the Effective Flower Room Equivalent Days in
order to produce the "Effective Yield Per Day" for each room, and
then divide the Effective Yield Per Day by the Design Capacity
Yield Per Day for each room in order to determine actual
performance versus the Design Capacity Yield Per Day (this ratio
being the "Performance Ratio"). Zenabis believes that the
Performance Ratio will provide investors with the best measure of
actual cultivation performance versus Zenabis' published design
capacity.
|
|
|
2
|
The Design Capacity
Harvest Weight is based on the "design capacity" yield that Zenabis
has disclosed to date. This figure 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 (the "Design Capacity Yield Per Day") is based on
Zenabis' historical yield data at the Zenabis Atholville facility
through September 2018. The 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."
|
2019 Full Year Harvest Forecast – Zenabis Atholville and
Zenabis Stellarton
For its existing licensed facilities of Zenabis Atholville and
Zenabis Stellarton (and excluding Zenabis Delta), Zenabis expects
to produce approximately 12,835 kg from May through December of
2019. The following table sets out Zenabis' estimated monthly
harvests for Zenabis Atholville and Zenabis Stellarton for the
remainder of 2019, as well as the forecast provided previously for
April of 2019 compared to the actual amount harvested in
April 2019.
|
April
2019
|
May
2019
|
June
2019
|
July
2019
|
Aug
2019
|
Sept
2019
|
Oct
2019
|
Nov
2019
|
Dec
2019
|
Total
|
Forecast3
|
495 kg
|
607 kg
|
668 kg
|
836 kg
|
781 kg
|
1,627 kg
|
2,263 kg
|
2,702 kg
|
3,351 kg
|
13,330
kg
|
Actual
|
809 kg
|
|
|
|
|
|
|
|
|
|
|
|
3
|
This forward-looking
estimate of future harvest results is based on the following
material assumptions: (1) Both Zenabis Atholville and Zenabis
Stellarton operate at their published design capacity on a room by
room basis; (2) There is one month of delay beyond the current
forecast date for cultivation commencement at each of the phases 2B
and 2C at Atholville; and (3) For each of phases 2A, 2B and 2C at
Atholville, three days of separation will occur between planting of
each room at the point cultivation commences.
|
Upon receipt of its cultivation license at Zenabis Langley,
Zenabis intends to provide a monthly cultivation forecast for
Zenabis Langley.
The timeline from harvest to the point at which Zenabis
completes a sale of that product ranges from a minimum of two weeks
(in the case of a bulk sale to a licensed producer) to more than
eight weeks (in the case of gelcaps which involve external
extraction, processing, filling, packaging of and shipment).
Zenabis recognizes the revenue from completion of such sales in
accordance with IFRS.
Construction and Facility Update
Zenabis Atholville (Indoor)
The 380,000-square-foot Zenabis Atholville indoor facility is
currently licensed to produce cannabis from 174,900 square feet
with annual design capacity of 12,500 kg. Zenabis is in the process
of constructing and licensing additional flower rooms and support
space to expand cultivation capacity in two blocks divided into
"Phase 2B" consisting of 76,700
square feet and "Phase 2C" consisting of 118,000 square feet.
Specific updates are provided below:
- Phase 2B: Zenabis has
submitted license amendments to Health Canada to commence
production in its Phase 2B expansion
project, which will expand the facility's annual design capacity by
9,800 kg.
- Phase 2C: Room construction and lighting are complete
for this phase. HVAC and electrical are nearly complete.
Installation of benches and irrigation equipment are ongoing.
Zenabis intends to submit its license amendment to Health Canada to
commence production in Phase 2C in late May or early June of 2019,
versus the prior timing of June or July of 2019 previously provided
in the March operational update.
Zenabis Langley (Greenhouse)
Zenabis is currently converting 10 acres of the first greenhouse
property ("Site A") following the successful transfer of all floral
and propagation business from Site A to Zenabis Aldergrove.
Construction at Zenabis Langley is progressing well and is on time.
Zenabis has completed the construction of all interior and exterior
insulated wall panels, offices and staff support areas, and the
majority of operational workspaces. The security and HVAC work are
ongoing and completion for June is on schedule.
Site A is divided into six flower zones, which are similar to
those in an indoor facility, but much larger in size. Construction
of the flower rooms is expected to be completed between June and
August, with the first phase of construction completed by the end
of June, and construction substantially complete for all rooms by
the end of July. Site A has an annual design capacity of 96,100
kg.
Zenabis Delta
Zenabis is currently in the process of constructing an
extraction, post-processing and analytical testing lab at Zenabis
Delta. All components of this construction are scheduled to be
completed in the third quarter of 2019.
Licensing Update
Zenabis is currently in the process of various licensing
submissions for Zenabis Langley, Zenabis Atholville, Zenabis Pitt
Meadows and Zenabis Aldergrove as outlined in the table below:
License
Submission
|
Submission
Date
|
Annual Design
Capacity
|
Zenabis Langley Site
A – Cultivation License
|
September 4, 2018
(Initial Submission Date)
January 25, 2019
(Amendment Submission Date)
Site evidence package
–
June 20194
|
96,100kg
|
Zenabis Langley Site
A – Industrial Hemp
|
February 9,
2019
|
N/A
|
Zenabis Pitt Meadows
– Industrial Hemp
|
April 4,
2019
|
N/A
|
Zenabis Aldergrove –
Industrial Hemp
|
April 4,
2019
|
N/A
|
Zenabis Atholville
Phase 2B
|
Part 1 – April 9,
2019
Part 2 – May 17,
2019
|
9,800kg
|
Zenabis Langley Site
B – Industrial Hemp
|
April 10,
2019
|
N/A
|
Zenabis Atholville
Phase 2C
|
May-June
20194
|
12,000kg
|
|
|
4
|
Expected submission
timeline.
|
Zenabis is currently using Zenabis Pitt Meadows, Zenabis
Aldergrove and Zenabis Langley for the propagation and floral
business. Zenabis intends to grow hemp on available land at the
Zenabis Pitt Meadows and Zenabis Aldergrove facilities upon receipt
of industrial hemp licenses from Health Canada. Zenabis intends to
grow hemp on available land and in available greenhouse space at
the Zenabis Langley facility upon receipt of an industrial hemp
license from Health Canada.
Please view the following links for Zenabis operational update
and corporate presentation:
https://www.zenabis.com/docs/zenabis-operations.pdf
https://www.zenabis.com/docs/zenabis-presentation.pdf
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in policies
of the TSX Venture Exchange) accepts responsibility for the
adequacy or accuracy of this release.
About Zenabis
Zenabis is a significant Canadian licensed cannabis 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. In addition to gaining technologically advanced
knowledge of plant propagation, the recent addition of
state-of-the-art greenhouses in Langley, Pitt
Meadows and Aldergrove
provides Zenabis with 3.5 million square feet of facility space
that can, upon full conversion, be dedicated to cannabis
production.
If all facility space at Zenabis Atholville, Zenabis Stellarton,
Zenabis Delta and Zenabis Langley is fully converted and dedicated
to production, Zenabis will own, and have access to, 660,000 square
feet of high quality indoor cannabis production space, as well as
2.1 million square feet of greenhouse cannabis production space at
its Langley facility, with this
production strategically positioned on Canada's coasts. Zenabis expects these
facilities to have an annual design capacity of 131,300 kg of dried
cannabis by the third quarter of 2019. These facilities, if fully
built out and converted for cannabis production, would have an
annual design capacity to yield approximately 478,900 kg of
dried cannabis annually, for both national and international market
distribution. An additional 700,000 square feet of greenhouse space
will be used to continue the existing propagation business and
produce industrial hemp, and can be converted to cannabis
production at such a time that is beneficial to the strategic
position of the Company. The Zenabis brand name is used in the
cannabis medical market, while the Namaste and Blazery 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
recently licensed facility space and facility space under, or
scheduled for, construction, the expected timing and completion of
current and planned conversion, expansion and optimization of our
facilities, the licensing of our facilities and projected timing
thereof; the adequacy of our financial resources to achieve the
conversion and expansion of our facilities; the timelines projected
for our internal post-processing capacities; and the expected
timing and 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.
SOURCE Zenabis Global Inc.