Aurora Cannabis Inc (OTCMKTS:ACBFF) has leadership that knows how to make a quick comeback. In the last month, the stock lost over 40% percent of its value, which could have caused any other group to panic. Instead, management has carried on with their business entering of new partnerships and making major investments which have reasonably improved the firm’s long-term outlook. In the past few days, it has enjoyed a continued rise from a two month low of $6.86 to $8.07.
Here is the stock’s price movement over the last year:
Aurora Cannabis Enterprises Inc. is a subsidiary of Aurora. The firm is a licensed producer of medical cannabis in line with Health Canada’s Access to Cannabis for Medical Purposes Regulations (ACMPR). The firm owns Aurora Mountain, an over 55,000 square foot, ultramodern manufacturing facility in Mountain View County in Alberta and is presently building a second production facility of 800,000 square foot, to be named “Aurora Sky,” located at the Edmonton International Airport. It has acquired and is currently working on the construction of another 40,000 square foot production facility in Pointe-Claire, Quebec, on Montreal’s West Island. For more information, you can look at our post here.
Back in January 2018, the company announced that it had gone into a binding term sheet to create a joint venture with Alfred Pedersen & Son, the agreement is that Aurora will in due course own a fifty-one percent interest in the joint venture company, Aurora Nordic Cannabis, which is to be located in Odense, Denmark. Aurora, along with Alfred Pedersen & Son indicated that they were expecting to complete the final agreement shortly after the development of the joint venture, after which Aurora Nordic would begin building a 1,000,000 square foot high tech cannabis production facility.
APS collected its cannabis cultivation license from Denmark’s Medicines Agency, which came into effect on January 1, 2018. This has provided Aurora Nordic with an added advantage as one among a handful of firms who have a cultivation license in Europe.
The newly developed production site expects a semblance of Aurora`s original production facility, Aurora Sky, with an estimated production level of over 120,000 kg per year. The construction process is to be gradual, with cultivation only starting after the first 200,000 square feet has been completed, this is estimated to be done by 3Q2018. This new facility, when completed, would position Aurora Nordic as the whole of Europe’s biggest cannabis producer.
Also, Pedanios GmbH; Aurora`s wholly owned subsidiary will have contact with the continent’s biggest cannabis distributor, hence giving direct access to a large and constantly growing customer base.
Aurora Nordic, through APS, has access to greenhouse space which the firm can use for cultivation in the summer based on its plans for the year.
According to the contract, and when some targets have been met by the JV, both firms plan to finance the building of the Aurora Nordic facility using a mixture of non-dilutive project finance, conventional and direct investment by APS and Aurora in a proportional manner.
Aurora Nordic intends to focus its operations on cultivating and selling of cannabis in Sweden, Denmark, Finland, Iceland, and Norway through Aurora’s wholly-owned subsidiary Pedanios GmbH. As Aurora Nordic expands its operating capacity, the excess capacity will be dispersed to other European nations.
The firm more recently announced that it had agreed to make a strategic investment in Liquor Stores through a non-brokered private placement.
The Private Placement has been arranged in two stages, with an initial investment of $103.5 million from Aurora for an estimated 20% ownership stake in Liquor Stores, and a further investment that could up Aurora’s stake in the firm to roughly 40%.
The proceeds from the capital raise are to be used in establishing and launching a new group of cannabis retail outlets while converting some of its already existing retail outlets into cannabis retail outlets. Liquor Stores also has plans to use funds for improving its retail liquor operations by the renovation of its old liquor store outlets and other corporate purposes.
Both firms believe that the private placement would provide significant benefits for all of their respective shareholders. The combination of Aurora’s strong brand leadership, quality merchandise, excellent customer relationship management, innovation and strong product awareness would complement well with Liquor Stores’ solid distribution network, proper guidelines in the retail of adult use controlled products, dedication to regulatory adherence, and deep resource pool with over 2,000 retail employees. The firms expect that the placement will help Liquor Stores in developing a leading retail brand in the cannabis sector, which is expected to become one of the strongest growth markets in Canada’s retail sector.
The firm’s financial statements reveal that revenues jumped significantly from $1.4 million in 2016 to $18.1 million, an increase greater than 1000%. However, net loss increased by roughly 50% mainly as a result of the increase in selling, general and admin expenses.
ACBFF has continued its trend of surpassing expectations. It is expected that the stock’s value will continue to appreciate as the market becomes more aware of its potential.
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Disclosure: We have no position in ACBFF and have not been compensated for this article.