Finally got around to looking at the Harvest One financials this evening, and in particular the MD&A provided some clarity on recent issues. I've bolded a few key extracts, but really the whole document is worth checking out on SEDAR.
United Greeneries
United Greeneries is licensed to produce and sell medical cannabis under the provisions of the ACMPR at its Duncan Facility located in Duncan, British Columbia. United Greeneries has several other projects under various stages of development. The Lucky Lake Facility is currently advancing through licensing with Health Canada. United Greeneries previously entered into a Letter of Intent (LOI) for a third party lease for a facility in Chemainus, BC. Concurrently with the due diligence on the Chemainus site, United Greeneries was assessing an alternative site in Aldergrove, BC.After extensive due diligence on both sites, the Aldergrove site was determined to be a superior site due to its location, easy access to transportation routes, ample available power and water and expanded capacity potential. United Greeneries announced it had entered into a definitive five year lease agreement, with three 5 year extensions, for the Aldergrove site in May 2018.
Apparently due diligence on both sites was conducted concurrently, which sits a little better with me. Original announcement painted a much worse picture.
Chemainus Facility
On November 20, 2017, the Company announced that United Greeneries entered into an LOI with a third party to lease the
Chemainus Facility. The Chemainus Facility was previously an industrial lumber kiln drying plant and, due to its existing
useable building envelope was well suited for a retrofit into an indoor cannabis cultivation facility. The initial facility design was for a total annual capacity of approximately 8,000 kg. The Company, however during the due diligence process, discovered several non-disclosed issues with the Chemanius property. These included but were not limited to issues pertaining to septic capacity and limited potential power that could be secured through a BC Hydro long-term power agreement. The company is fully committed to it’s 20,000 kg target by the end of 2018 and was conducting a parallel due diligence examination of a second site in BC in tandem with the Chemanius due diligence process.
Septic issues in particular could have been a sticking point with HC, but I'm just speculating. At the very least, power and septic issues severely limit expansion & capacity.
Lucky Lake Facility
The Lucky Lake Facility, located in Lucky Lake, Saskatchewan, is a 62,000 square foot concrete agricultural facility located
on over 18 acres of land which is wholly-owned by United Greeneries. The Lucky Lake Facility's application to become a
Licensed Producer is now advancing through the final stages of approval with Health Canada and expects initial licensing under the ACMPR to occur in the third quarter of the 2018 calendar year.
United Greeneries is actively considering several build out scenarios for the Lucky Lake facility. The Company is examining
several new cultivation technologies that if deployed could increase yields and the quality of the product. Lucky Lake is
capable of delivering over 80,000 square feet of actual growing space (canopy space) with an estimated total capacity of
12,000 kg of dried cannabis flowers per annum. United Greeneries continues to prepare the site for a staged modular build
out and expects to bring this new capacity into production by the end of the 2019 fiscal year, subject to regulatory approval.
Lucky Lake license before September would be a welcome boost to capacity & sentiment.
MMJ Price at posting:
31.0¢ Sentiment: Buy Disclosure: Held
