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Aphria Inc Making Big Moves

Aphria Inc Making Big Moves
Written by
Alex Carlson
Published on
December 27, 2016
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Aphria Inc continues to prove why it's one of the must-own stocks in the cannabis space with a series of aggressive moves. We knew this was going to happen last month after the company boosted its war chest. Aphria Inc closed a private placement with Clarus Securities Inc generating C$35 million, bringing its total cash hoard to just over C$88 million. We said at the time that "we believe the company is on the verge of some major developments in terms of production and M&A activities." As we look at the latest developments, Aphria Inc could just be getting started with its grand plans.Last week, Aphria Inc closed its deal to purchase 16.6% of Canabo Medical Inc (TSX VENTURE:CMM). Aphria Inc bought 6,000,000 common shares at C$1.40 for C$8.4 million. Canabo wholly owns and operates Cannabinoid Medical Clinics, or CMClinics, Canada's largest referral-only clinics for medical cannabis. After opening in 2014, Canabo now has ten clinic locations, including Toronto, Barrie, Ottawa, Hamilton, Halifax, St. John's, and Edmonton, with a number of additional clinics planned for opening in 2017. Canabo Executive Chairman Neil Smith said:

"Aphria is a producer that aligns well with Canabo. We are both committed to advancing research to support medical cannabis treatments, and their products are achieving excellent results with many of our patients."

Aphria Inc also finalized its investment in Copperstate Farms LLC and Copperstate Farms Investors LLC. Aphria received final approval from the TSX Venture Exchange after the company acquired an additional 5% membership interest in Copperstate Farms Investors LLC, increasing its ownership to 10%, while also maintaining a 5% membership interest in Copperstate Farms Investors LLC, subsidiary Copperstate Farms LLC.In October, Aphria entered into an Intellectual Property transfer agreement with Copperstate Farms LLC. Copperstate has one of the largest medical cannabis greenhouse facilities in Arizona, a 40-acre (equivalent to 1.7 million square feet) high-tech, Dutch style greenhouse facility in Snowflake, AZ. As part of the original transaction, Aphria will share its accumulated knowledge, gained during its 5-year MMAR/MMPR/ACMPR journey, related to growing cannabis in greenhouses in exchange for a 5% ‘cashless’ membership interest in Copperstate, entitling Aphria to 5% of the free cash flow generated by Copperstate.Next month, Aphria Inc expects to close 200 acres of fully serviced vacant land for C$6.24 million located at 521 Mersea Road 8, Leamington, Ontario. The land acquired does not abut the Company's existing operations, so Aphria will require a new site licence from Health Canada for the property. Aphria also announced that it removed all conditions attached to a purchase and sale agreement to acquire 5 acres of largely vacant land located on the eastern border of its existing Health Canada approved site licence. The purchase price for the 5 acres was C$750,000 and is expected to close in late December 2016 or early January 2017. Concurrent with this transaction, the abutting property will be merged into Aphria's existing municipal address, thereby avoiding the need to apply for a new Health Canada site licence for this parcel of land. CEO Vic Neufeld said:

"Aphria, with 52 acres of land on its primary site licence, is well on its way to its previously discussed 1 million square feet of growing space. Securing a second site represented an important part of Aphria' diversification plans. Being able to secure a 200-acre site, in one acquisition, positions Aphria to rapidly advance its expansion plans, when demand for recreational use of cannabis is legalized."

Earlier this month, Aphria Inc made a C$1 million investment in Tetra Bio-Pharma Inc (CSE:TBP) and (OTCMKTS:GRPOF). Aphria purchased 5,000,000 units at a price of C$0.20 per unit. This follows the deal signed in October with Tetra Bio-Pharma Inc and its subsidiary, PhytoPain Pharma Inc (PPP). Aphria is supplying the dried medical cannabis for PPP’s inhalation cannabis product PPP001. PPP001 is a medical marijuana product that the company is developing as a prescription controlled drug for inhalation using a fully assembled titanium pipe.Besides strategic investments, Aphria is about to embark on a major expansion with its Part III expansion, which includes 200,000 square feet of state-of-the-art Dutch style greenhouses, 21,000 square feet of infrastructure, including four Level 9 vaults, automation for both the greenhouses and processing areas and security consistent with ACMPR standards. This expansion will boost the company's growing capabilities from 5,500 kgs annually to 18,000 kgs annually.Currently trading with a market cap of C$532 million, Aphria Inc remains one of Canada's lowest cost producers of medical cannabis. As we said last month, any dips towards the C$4 are to be used as buying opportunities. This is where Clarus Securities and its clients invested C$35 million into the company. With its cash hoard, expansion plans, and strategic investments, Aphria Inc remains one of the best-run cannabis plays in Canada and a must-own for pot stock investors. We will be updating our subscribers with the latest on Aphria and other cannabis names. For complete coverage, sign up below!Disclosure: We have no position in Aphria Inc and have not been compensated for this article.

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