Cann Group has reached out to shareholders to further expand cultivation and production at its $120 million Mildura facility.
The company is seeking to raise $11.7 million to bring the medicinal cannabis cultivation and research site to a fully operational capacity of 12.5 tonnes of dried biomass annually.
The facility recently completed its first annual commercial crop, where about 3.1 tonnes of dried biomass was produced for a range of dried flower and oil products.
Cann Group chief executive Peter Koetsier said the decision to raise further capital from shareholders was driven by the development potential of the business.
“It’s the perfect point to go back to everyone saying ‘proof of principle, we’ve got this thing working, it’s now time to really turn it up and turn it on,’” Mr. Koetsier said.
“Accelerating what’s happening in the Mildura facility will also take us to that point at which we start become operationally profitable, which is obviously crucial.”
The new capital raise effort valued shares in the company at 12 cents each, well below a 52-week reached last July, when the market traded shares at 34 cents.
In May, the company planted its biggest crop to date, as it planned to triple production to about nine tonnes of dried biomass by June next year.
In a prospectus released this month, the company listed a range of measures it would take to increase the facility’s output, such as enhancing automation during manufacturing, recruiting more staff, and increasing quality control.“
“Because we’re increasing production, the automation frees up some of that manual labour,” Mr. Koetsier said.
“Some of the staff who’ve really gained a lot of experience over the last year or so, they can start doing other things in the facility.”
Funds would also be allocated to feasibility projects to reduce on-site waste and electricity usage and for research and development.
“We are trying to develop more products – without going into huge detail,” Mr. Koetsier said.
“Those are also products (to be) made in the Mildura facility, so we’re investing in the R&D part of that.
“It’s all about taking all the facility, all the money that has already been put in, to build the facility and really make it do what it is designed for, and really enhance and extend the production levels.”
Mr. Koetiser described the company as being at a real pivot point, with the significant increase in production a “really exciting point in the history of the company.”
Cann Group recently signed a variation agreement with Levin Health to supply $880,000 of medicinal cannabis products in the coming six months.
“The deal with Levin, I think, is the very first small taste of the sorts of cooperative deals we want to do with our customers,” Mr. Koetsier said.
“It’s also a great signal – I hope – to the world, with capacity, with quality, and with the capabilities that we’ve built in Mildura that we’re now ready to say let’s start having long-term collaborative deals.
“As we start to produce, we will get efficiency, we will get cost for products down, and that allows us to obviously be much more competitive in the marketplace as well.”
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