Qbl looking a lot more healthy, updates are meant to be out this week, page-167

Hi Guys,

Some of the comments by people are just going too far with the writer's license. If they weren't serious in their intent it would be humorous. So let me address some of these issues and try and help many with their questions and refute the negative argument.

S: One of the posters incorrectly stated last night that the crops have failed.

A: “Chief Technical Officer of MCL, Andrew Kavasilas reports “We were receiving reports about failed plantings and damaged crops from other Hemp Crop farms, and despite this, our farmers remained confident, and through strict harvest management and observation protocols we were able to successfully grow our crops through to full maturity, and harvest top quality hemp seed.”

OUR CROPS DID NOT FAIL!

These types of posts are the reason why the Company is very concerned for its shareholders. Misinformation or incorrect reading of our notices followed by criticism, repeated enough times, will eventually undermine confidence.

We also MUST question the “who is to be believed?” comments. With the Volcan response, the ASX short notice response, the rent reply, the Jarad Ratcliff answer, and this post about the harvest, it is reasonable to begin challenging those questions and query the lack of facts to support any case that tries to show the company is on a rocky road to failure. The real story is quite the opposite.

Q: Why is our share price holding?

A: Our major shareholders who are in constant contact with Senior management and many of our L/T holders who have spoken with Sholom, Andrew, Pete and other management will be able to answer that question properly. The facts don't lie. We have been carefully and methodically building the foundations for a great business, and we believe the fundamentals are just too strong and cannot be ignored by those investors who have researched our business model properly.

Q: Why was the yield less than what we expected and why did it take so long to get back a report about the crops?

A: SOME BACKGROUND

My family background and that of my relatives, were in rural (poultry and dairy), on my Mother's Side, and Honey on my Father's side, just outside of Newcastle and in the Gloucester Area. My 2 Uncles had large Canola Fields outside of Dubbo. My father was an Apiarist and Honey Retailer. So I am very familiar with farming practices and agronomy. I say that to lead into answering these questions with confidence.

DEALING WITH THE QUESTIONS

Let's address these questions by looking at portions of the announcement.

"Chief Technical Officer of MCL, Andrew Kavasilas reports “We were receiving reports about failed plantings and damaged crops from other Hemp Crop farms, and despite this, our farmers remained confident, and through strict harvest management and observation protocols we were able to successfully grow our crops through to full maturity, and harvest top quality hemp seed. We are proud that we are working with farmers whom we believe to be of the most technologically advanced and experienced in Australia, and we believe that they will very quickly learn and adapt to quickly maximising future grows and harvests on a very large scale to be able to supply the local and global markets with top quality wholly Australian natural hemp seed."

"We were receiving reports about failed plantings and damaged crops from other Hemp Crop farms".

This was a very tough year for many hemp crop farmers. You need to have large yields to make large profits. Some other farmers didn't even see the full maturity growth cycle with their hemp crops. There are four principal stages for growing hemp crops: 1) germination and emergence, 2) vegetation, 3) flowering, and 4) seed senescence. Due to the professional practices of our MCL's farmers, we were very fortunate to see full maturity growth in many of our crops.

http://www.abc.net.au/news/2018-05-...ping-knowledge-builds-with-first-crop/9722464.

The above article is just one of a few articles that address issues this year with the first crops after the November approval. Our understanding is that our competitors had significantly less tonnages of yields than we had.

ADDRESSING THE CHALLENGES WITH HARVEST GROWTH

Farmers across Australia have been working for months to assess the reasons for varying difficulties with hemp seed including reporting that the seed would not dry quick enough. This can lead to rotting and destruction of the seed. Due to the expertise of our farmers and Andrew's experience, this was not an issue that materially affected our crops.

The issues faced by the industry, in general, was clearly identified and explained by Andrew in the announcement:

“The 2017/18 growing season proved challenging for all in the Australian industry. Firstly, the timing of the final approval, in November 2017, didn't provide an adequate or concise regulatory regime and safeguard for full production models to be implemented. Secondly, farming conditions, and the challenges of growing these new crops, which included sowing certain batches of seeds for certain soils, in the different temperate climate zones has provided some unique challenges for Summer and Winter Trial crops, for all Australian farmers. Thirdly, variety choices, and sowing dates, are still being analysed by agronomists to understand why some farmers stated that they had difficulties in successfully harvesting some of the fully-grown crop. Fourthly, weather events, including some severe drought and alternatively strong storms additionally affected the yields."

MCL, through our farms, in Victoria and NSW were of the first in Australia, thanks to Andrew Kavasilas' advanced knowledge of hemp plants, to advise our farmers on how to quickly adapt advanced farming techniques to cultivate the hemp and see many of our large plants reach maturity.  

ANDREW WAS ABLE TO OVERCOME THE CHALLENGES FACED BY MANY FARMERS

"In 2017/18 hundreds of hectares of seasonal trial crops were grown for MCL in large broad-acre hemp farms in NSW, Victoria, and Tasmania. In recent discussions with MCL’s farmers and from inspections of these crops, Technical Director of MCL, Andrew Kavasilas, states that he is proud that MCL is amongst the first in the country who are progressing the learning curve in adapting existing infrastructure and growing techniques to cultivate hemp, a brand new broad acre crop, through to harvest."  


DID THE COMPANY PURPOSEFULLY DELAY THE HARVEST NEWS?

Did the company purposefully delay or hide news about the Harvests? Absolutely not, and we reject outright any comments to the contrary.

Andrew, our farmers, and agronomists have been working tirelessly for months to assess soil quality, seed germination rates, seed failure ratios for seed groups in the different temperate zones. Why some seeds thrived in one zone and failed in another. This has taken many months of observation and research to be able to reach a conclusion on correct seed choice for soil zones in different temperate zones around Australia. Plant heights and sexes were observed and data had to be analyzed during and after complete growth cycles. Everyone saw photos of plants at different heights and stages of growth earlier in the year. Then it is followed by a lengthy and complex harvesting, cleaning and storage process, which has only been underway over the past few weeks.

WHAT ARE TRIAL CROPS?

Trial crops are very important to the eventual full-scale sowing, cultivating and harvesting of the hundreds and even thousands of acres required for large-scale broad-acre hemp crops.
I remember my uncle showing me the different seed groups for Canola and taking me to his trial crop plots where he explained to me about they tested for stalk and plant hardiness and assess the suitability of new canola seed strains. Canola, itself takes over 3.5 months to grow.

City people have no idea what is involved in growing crops and the time it takes to successfully trial and grows certain genus of plant which will thrive in the different soil groups. Growing crops is not like growing an onion seedling in a backyard. We are wondering and have been concerned that impatience, the lack of understanding why there are delays in getting back answers, and the sheer volume of questioning posts have caused some to seriously doubt their holdings.

If the crop hasn't finished its complete cycle we cant supply the answer, no matter how many times we are asked. Full stop! That is the truthful response that you will always get from this company. We don't have the answers yet because we don't have the results yet. Not because there is something nefarious going on.  Crops in trial years will have lower yields, and let me tell you it wasn't from the lack of trying either.

TRIAL CROPS MUST HAVE THE INCLUSION OF CONTROL PLOTS

Trial crops need to have the inclusion of Control Plots.  These control plots are used for matching seed to soil, for germination cycle timing, to observe pest resistance and weed infestation. It wasn't legal to do this on a large scale for human consumption before November 2017 and so the argument of others have been doing it doesn't suit this professional commercial crop situation. The argument that there was hemp food being grown for pets also cannot be justified as this was done on small-scale farms and was highly regulated and monitored. The dehulling process and refining process for pets is also on a completely different scale as compared to refined hemp for human consumption.

THESE ALL TAKE TIME. In one of our latest announcements, it was stated "Rome was not built in a day" Hemp was just legalized in November. In perfect conditions, hemp will grow and reach maturity in 3 months. These are the first trial crops that have been grown! These are the first trial crops that have been grown on a large commercial scale! The trial crops have to be constantly assessed by our growers and agronomists for seed quality and the plants for hardiness, and any infestations and weed control, once the flowers emerge they are checked for bud quality, shape, and fullness.

Depending on the sex of the plant that grows will often determine the size of your yield per crop plot.

THE HEMP INDUSTRY IS IN ITS INFANCY

It can't be stated any more clearly. We have just come out of the first 6 months...not 6 years.

We can only caution our shareholders to be VERY careful to not misread timelines. Flooding of the forum with interrogative style posts can cause people to lose sight of that fact that we are in the infancy stage of the hemp industry. Please do not lose sight of that fact.

Notwithstanding that, in the latest announcement, Andrew made the following comments that he is confident that the business is still well placed to be a seriously large producer even in the short term: "The lower than expected yields of the hemp crops means that major expansion will take a little longer to implement than we had initially expected, but we are hopeful that the winter crops will fare better, and we have much greater confidence in the upcoming spring crops to achieve the numbers we have been hoping for to supply the market to meet the huge demand we have been seeing.”

CONCLUSION

What distresses the company the most has been watching all these posts that have questioned our credibility, our professionalism to get the job done, have ignored our successes, questioned our ability to manage the finances, in spite of having millions in the bank and no major CR' s since early last year, have completely ignored the fact that amongst the 23 MM stocks on the ASX at the moment we are in the small very select group of Cannabis companies that are actually making revenue, even in these formative years, and yet we are criticized and shareholders confidence is being undermined. We just don't understand why people would do this to the company. Even the latest situation with Jarad is an example of how quickly Social media can jump to a wrong conclusion and make people doubt the sincerity of the company. Last night’s report to Forum proved that those questions about Jarad have come to naught with the first investigation bearing out that it appears that he was indeed innocent and like we have been seeing lately those negative comments are being proven to be false, just like these bee swarm questions that have been aimed towards the company.

We will be back to answer more questions over the coming days and present the real story here.

Neil1959
HC QBL rep
QUEENSLAND BAUXITE LIMITED