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Aurora Cannabis Inc (CVE:ACB) (OTCMKTS:ACBFF) Remains A Top Cannabis Pick

Aurora Cannabis Inc (CVE:ACB) (OTCMKTS:ACBFF) Remains A Top Cannabis Pick
Written by
Alex Carlson
Published on
March 2, 2017
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Aurora Cannabis Inc (CVE:ACB) (OTCMKTS:ACBFF) has been a favorite cannabis play here at Insider Financial. Each time we cover the company, we become more and more impressed with the job CEO Terry Booth and his team are doing. After posting strong Q2 results and closing a C$75 million financing, there's a lot to like with Aurora Cannabis Inc.First up, a little background on the company for our readers taking their first look at an exposure. Aurora's wholly-owned subsidiary, Aurora Cannabis Enterprises Inc., is a licensed producer of medical cannabis pursuant to Health Canada's Access to Cannabis for Medical Purposes Regulations (ACMPR). The Company operates a 55,200 square foot, state-of-the-art production facility in Mountain View County, Alberta , and is currently constructing a second 800,000 square foot, highly automated production facility at the Edmonton International Airport.In Q2, Aurora sold 538,045 grams of cannabis, up 23.5% from Q1 2017. The company generated revenues of C$3.9 million, up 26%, or approximately $0.8 million , from Q1 2017, reflecting an increase in the average price per gram of product sold. The Company recorded a net loss of C$2.7 million for the quarter, as compared to a C$0.6 million net profit for the same period in the prior year and a C$2.9 million improvement from a C$5.6 million loss for Q1 2017. Aurora defined its outlook as:

Aurora's business strategy is to continue accelerating its penetration of the Canadian cannabis market, leverage its Health Canada sales license for derivative products (cannabis oils) and launch cannabis oils sales, transition to profitability in the short-term, and complete a major facility expansion for additional production capacity. When the federal government passes legislation legalizing the consumer use of cannabis, the Company anticipates participating in the non-medical consumer market, and will envision further production capacity expansion to meet future market demand for cannabis products.

In January, Aurora was licensed by Health Canada for the sale of cannabis oils. CEO Terry Booth said:

"Obtaining our license to sell cannabis oils is another major milestone for Aurora, and we can now participate in the derivative cannabis market by further expanding our product line for patients, and offer prescribing physicians a high-quality alternative to inhaled products."

Earlier this week, Aurora completed its previously-announced bought deal private placement for gross proceeds of C$75 million. Aurora issued 33,333,357 Units pursuant to the Offering at a price of $2.25 per Unit. Each Unit is comprised of one common share of the Company and half of one Common Share purchase warrant. Each Warrant is exercisable to acquire one Common Share for a period of two years following the date hereof at an exercise price of $3.00 per Warrant Share.Aurora is also working with Radient Technologies to confirm the effectiveness of Radient's MAP technology for cannabis extraction. Initial results from the first phase of the study are encouraging. As a result, the parties have agreed to move to the second phase of the project, which includes preliminary scale-up activities. The second phase of work under the study has commenced and is expected to take approximately eight weeks.Aurora also invested in Radient through a convertible debenture. The Debenture has a principal amount of C$2 million, a term of 2 years, bear interest at 10% per annum, and is convertible into units of Radient at a conversion price of C$0.14 per Unit. Each Unit is comprised of one common share of Radient and one share warrant, exercisable within 24 months, for one common share of Radient at an exercise price of C$0.33 per warrant. The Debenture is repayable on demand from Aurora at any point within five months from the date of issuance.Aurora will also be the lead investor in a Radient private placement. Aurora will invest up to C$1.25 million in the offering. Units in the offering, priced at C$0.45 each, are comprised of one common share of Radient and one half common share purchase warrant at a price of $0.70 per common share. Radient CEO Denis Taschuk said:

"We are very encouraged with the initial positive results generated through the collective efforts of the Aurora and Radient teams, using our extraction expertise and technology for cannabis extraction, and we feel confident in meeting Aurora's objectives. Additionally, the increasing corporate ties between Aurora and Radient and the funds raised provide us both with the resources and the ideal platform to implement our go to market strategy."

This week, Aurora released its second generation mobile app. The new app enables the Company to communicate directly with clients via real-time push notifications for new product releases, send automated text reminders for upcoming account renewals, and introduces clients to a new message center with personalized Aurora Newsfeed. Registered clients can conveniently scroll through high resolution images, view product descriptions and cannabinoid profiles, and view account and prescription details.

Payment methods can be added and removed, answers to frequently asked questions (FAQs) easily accessed, and clients can place orders and choose from multiple courier options. The app allows clients to complete orders in seconds, from any location, via their phone or tablet device, and also integrates Canada Post and Purolator Application Programming Interfaces (APIs) to allow for real time tracking of shipments from directly within the app.

Currently trading with a market cap of C$691 million, Aurora Cannabis is certainly a must-own stock for cannabis investors. The new 800,000 square foot Aurora Sky facility now under construction at Edmonton International Airport will turn Aurora into a cannabis giant allowing for the company to serve not only Canada, but international markets as well. With its license to sell cannabis oils, Aurora is poised to become one of the largest producers and distributors of cannabis oil products. Add in recreational marijuana legalization in Canada just around the corner, we expect 2017 to be a big year for Aurora Cannabis and its stockholders.

We will be updating our subscribers as soon as we know more. For the latest updates on ACB/ACBFF, sign up below!

Disclosure: We have no position in ACB/ACBFF and have not been compensated for this article.

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