Medcolcanna Organics Inc. (TSX-V: MCCN)
(“
Medcolcanna”, “
MCCN” or the
“
Company”), a Canadian medical cannabis company
with operations in Colombia, is pleased to announce that, further
to its press release dated April 7, 2020, Dona Blanca Limited
(“
Dona Blanca”), has elected to enter stage 2 of
the previously announced joint venture arrangement with Medcolcanna
(the “
JV”) and will invest an additional $483,000
USD which will complete Dona Blanca’s total investment of
$1,000,000 USD on two hectares of greenhouse space on Medcolcanna’s
fully licensed cultivation property, which will earn Dona Blanca a
70% working interest (“
WI”) in those two hectares.
Pursuant to the definitive agreement with
respect to the JV, Dona Blanca had agreed to invest up to
$1,000,000 USD ($1,408,000 CAD), to build up to an additional two
(2) hectares of greenhouses on Medcolcanna’s fully licensed
cultivation property, which would earn Dona Blanca a 70% working
interest (“WI”) in the economic rights to the
output from such greenhouses. Dona Blanca previously earned into
stage one of the project, which has now been fully funded.
Dona Blanca has now elected to enter into stage two of the project
whereby Dona Blanca will invest an additional $290,000 USD
($408,000 CAD) by May, 15, 2020 to earn an additional 20% WI or an
aggregated 55% WI, or 1.1 net hectares in the aggregate; and stage
3 whereby Dona Blanca will invest an additional $193,000 USD
($272,000 CAD) to earn an additional 15% WI or net 1.4 hectares in
the aggregate.
Management Commentary
“We are pleased to announce that Dona Blanca has
elected to enter into stage two of the project and reconfirm their
investment of $483,000 USD ($380,000 CAD), of which $290,000 USD
($408,000 CAD) will be funded within the next 10 business days,”
commented Felipe de la Vega, CEO of Medcolcanna. “Dona Blanca’s
entrance into stage two of this project further demonstrates MCCN’s
commitment to professionalism of our people and operations, as well
as our commitment to monitoring and tightly controlling our capital
and operational expenditures, as well as G&A, in order to
produce a high quality product at a low cost. The climate and
highly skilled, low cost labor available to MCCN in Colombia
provides many cultivation advantages. We have effectively leveraged
these advantages and continue our efforts to further reduce
costs.”
Mr. de la Vega further added, “We are pleased
that Dona Blanca has entered into the second phase as by increasing
our area of cultivation, both MCCN and Dona Blanca will benefit
from fixed costs that will be reduced on a per hectare or per plant
basis as well as synergies and economies of scale.”
“We are pleased that Dona Blanca elected to
deepen their commitment to the project by entering into stage 2, as
the additional benefit that MCCN and its shareholders will receive
is the non-dilutive financing of a 30% working interest that
requires no capital investment from MCCN, but is awarded to MCCN to
operate the project. We are very pleased that Dona Blanca is
continuing to fund the project during this COVID-19 period.
Medcolcanna continues to operate and execute during this period
however MCCN’s priority continues to be the health and safety of
its employees, partners, and the communities in which it operates,”
commented Chris Reid, CFO of MCCN.
“MCCN is pleased that Dona Blanca has entered
into this second phase. Our partners at Dona Blanca are not only
investing 100% of the projected costs for the two hectares under
greenhouse, but they are also bringing an experienced and
knowledgeable management team into partnership with MCCN through
this JV. MCCN believes that this relationship will bring
additional strategic benefit to both parties within the growing
cannabis industry,” commented Medcolcanna Chief Corporate
Development Officer, Daniel Herrera.
“Dona Blanca’s commitment to entering stage 2 of
the project, is another great milestone for our company. We are
committed to the JV with MCCN. The partnership is a prudent
investment for Dona Blanca. MCCN has all licenses and permits in
place, so once the quick construction period of greenhouses is
completed, MCCN will begin cultivation, which gives us a fast path
to cash flow generation. Dona Blanca is confident that this
will represent a great return on investment for our shareholders,”
added Rob Dzisiak, Managing Director of Dona Blanca.
HIGHLIGHTS OF THE
AGREEMENTS
JOINT VENTURE AGREEMENT WITH DONA
BLANCA
- Medcolcanna is to construct an additional 2.0 hectares (215,278
square feet) of greenhouse space at its El Candil farm located in
Cota, Colombia.
- Medcolcanna to provide 2.0 hectares of fully licensed farmland,
next to its current three (3) hectare farm at its El Candil
location, which will allow Medcolcanna the ability to provide
seamless operations and synergies with current operations. This
land space is already fully licensed for cultivation and
manufacturing, streamlining the path to commercialization.
- Dona Blanca will fund 100% of capital expenditures, start-up
operational costs and administration costs in three phases
which if all completed will earn it an aggregate 70% working
interest in the newly constructed 2.0 hectares of commercial
greenhouse space. Medcolcanna will retain a 30% working
interest in the associated economic rights.
- The first cultivation is expected to begin in two months, with
the first harvest in six months and revenue on the additional 2.0
hectares beginning in approximately seven months.
- These new facilities are conservatively estimated to be capable
of producing approximately 1,300,000 grams of CBD/THC oil per
year.
- Dona Blanca has advanced to Medcolcanna a total of $517,000 USD
($734,000) for the full funding of stage 1 of the project and will
now advance $290,000 USD ($408,000).
In connection with the funding of the JV by Dona
Blanca, the Company is paying a finders’ fee to an arm’s length
party called Seacap Consulting SRL consisting of common shares in
the capital of the Company equal to 3% of the cash value of the
investment by Dona Blanca (being USD$15,000) upon the receipt by
the Company of those funds and based on the closing price of the
shares on the date funds are advanced. The issuance of this
finder’s fee is subject to acceptance and approval by the TSX
Venture Exchange.
ABOUT DONA BLANCA LIMITED
Dona Blanca is a private Australian company that
operates in Colombia through its wholly owned subsidiary, Extractos
Doña Blanca S.A.S. The company has the cultivation
licenses and extraction licenses on 5.1 hectares of land near
Santa Rosa de Cabal. Dona Blanca completed its first capital
raise in October of 2019.
ABOUT MEDCOLCANNA
Medcolcanna is a Canadian integrated medical
cannabis company, whose fully licensed operations are based in
Colombia. Led by a proven and successful management team,
Medcolcanna has facilities in optimal growing locations which
positions the Company to become a global leader in the medical
cannabis market.
Medcolcanna employs state of the art organic
agricultural technology and innovative pharmaceutical processes to
produce high-quality products. The Company’s scalable production
model and network of pharmaceutical partnerships globally ensures
that they remain at the forefront of the medical cannabis
industry.
If you would like to receive News Releases via
email as soon as they are published, please subscribe here:
https://medcolcanna.com/contact-us/ or write to
info@medcolcanna.com.
Additional information about Medcolcanna can be
found on its web site at www.medcolcanna.com
Neither the TSX Venture Exchange Inc. nor
its regulation services provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release.
Investor Relations
Contact:Chris Reid, CFOCarrera 49b # 93-62Bogotá,
ColombiaEmail: info@medcolcanna.com
Felipe de la Vega, CEOCarrera 49b # 93-62Bogotá,
ColombiaEmail: info@medcolcanna.com
Forward-Looking Statements
This news release contains “forward-looking
information” and “forward-looking statements” (collectively,
“forward-looking statements”) within the meaning
of the applicable Canadian securities legislation. All statements,
other than statements of historical fact, are forward-looking
statements and are based on expectations, estimates and
projections as at the date of this news release. Any statement that
involves discussions with respect to predictions, expectations,
beliefs, plans, projections, objectives, assumptions, future events
or performance (often but not always using phrases such as
“expects”, or “does not expect”, “is expected”, “anticipates” or
“does not anticipate”, “plans”, “budget”, “scheduled”, “forecasts”,
“estimates”, “believes” or “intends” or variations of such words
and phrases or stating that certain actions, events or results
“may” or “could”, “would”, “might” or “will” be taken to occur or
be achieved) are not statements of historical fact and may be
forward-looking statements. Forward looking statements contained in
this news release include statements and expectations concerning
the finalization of the JV arrangement with Dona Blanca and the
expected production of cannabis related products from such
arrangement. Forward-looking statements are necessarily based upon
a number of estimates and assumptions that, while considered
reasonable, are subject to known and unknown risks, uncertainties,
and other factors which may cause the actual results and future
events to differ materially from those expressed or implied by such
forward-looking statements. Such factors include, but are not
limited to, general business, economic, competitive, political, and
social uncertainties; the delay or failure to receive board,
shareholder or regulatory approvals and the failure to achieve the
expected financial or operational results from the transactions
described herein. There can be no assurance that such statements
will prove to be accurate, as actual results and future events
could differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on the
forward-looking statements and information contained in this news
release. Medcolcanna assumes no obligation to update the
forward-looking statements of beliefs, opinions, projections, or
other factors, should they change, except as otherwise required by
law.
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