VANCOUVER, British Columbia, June 18, 2018 (GLOBE NEWSWIRE) -- Auxly Cannabis Group Inc. (TSX-V:XLY) ("Auxly" or the "Company") is pleased to announce that further to its previously announced transaction on February 16, 2018, the Company has entered into a definitive joint venture agreement with Peter Quiring, one of Canada’s largest greenhouse builders and operators, via a newly formed subsidiary (the "JVCo"), to develop, construct and operate a fully-automated, state-of-the-art, purpose-built greenhouse for cannabis cultivation in Leamington, Ontario (the "Facility").
Pursuant to the agreement, Mr. Quiring, through South Essex Fabricating, will be responsible for the design, construction and operation of the Facility, and the Company will be responsible for funding the project and assisting JVCo in obtaining its ACMPR license for the cultivation and sale of cannabis (the “License”) by providing JVCo with all of the resources and expertise necessary to achieve the License. The Company expects to finance the multiple phases of construction of the Facility with cash on hand and alternative sources of non-dilutive financing, where available.
The Facility will be designed as a hybrid greenhouse with a supplemental indoor facility to optimize operational efficiencies. The initial phase of the project has been designed with a footprint of 1,400,000 square feet (“Phase I”) while additional phases of the project contemplate an expansion of up to a total of 2,800,000 square feet. JVCo has acquired 100 acres of land for the development of the Facility which is fully powered with sufficient electricity for Phase I and the future expansions.
The parties are actively working to finalize the construction budget and timeline associated with the development of Phase I. At this time the Company expects that, subject to necessary approvals, the construction of the Facility will commence during the summer of 2018, with completion and commissioning occurring by the end of Q3 2019 and planting commencing shortly thereafter.
Hugo Alves, President of Auxly, stated: “The combination of being the largest builder of greenhouses in Canada and the experience of operating 175 acres of greenhouses in Canada and the United States, truly places Peter in a league of his own. As a cornerstone partnership in the Auxly platform, JVco is a unique opportunity to achieve large-scale, low cost production of cannabis with one of North America’s premier greenhouse operators. Upon completion, this upstream project will be a significant source of product into our midstream value-add and downstream distribution channels. We look forward to building a state-of-the art facility with Peter and his team and a long and successful business partnership.”
Peter Quiring, Founder and President of Nature Fresh Farms and South Essex Fabricating, and CEO of JVCo, commented "We could not be more pleased to have reached a definitive agreement on this project. The depth of knowledge, execution capabilities and work ethic possessed by the Auxly team is unique to anything else we have seen in the industry. We are excited to move this project into the execution phase to build out a truly world-class cannabis cultivation project that will benefit both the community of Leamington and the broader Canadian cannabis industry.”
In consideration for the agreement, the Company will issue 5,250,000 common shares to Mr. Quiring at a price of $1.12 per share, with 1,250,000 common shares to be issued upon the closing of the transaction, and the remainder to be held in escrow and released in tranches corresponding to the achievement of certain operational and performance milestones. The Company will also issue 10,000,000 common share purchase warrants (the “Warrants”), where 2,000,000 Warrants will vest upon the closing of the transaction and the remainder will vest in tranches corresponding to the achievement of certain operational and performance milestones. The Warrants are exercisable at a price of $1.57 per share and have a term of five years from issuance.
The completion of the transaction, including the issuance by the Company of the common shares and the Warrants, is subject to approval by the TSX Venture Exchange.
ON BEHALF OF THE BOARD
"Chuck Rifici" Chairman & CEO
About Auxly Cannabis Group Inc. (TSX-V:XLY)
Auxly Cannabis Group is a collective of entrepreneurs with a passion for the cannabis industry past, present and future. Our mandate is to facilitate growth for our partners by providing them with financial support and sharing our collective industry experience. Our partners all have different visions, voices and brand values, and all share a common goal—to build a world-class industry based on ethics, diversity, quality and innovation.
Investor Relations:
For more information about investing in Auxly Cannabis Group, please visit: http://www.auxly.com or contact our Investor Relations Team:
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Sarah Bain, VP External Affairs
Email: sarah@auxly.com
Phone: 613.230.5869
Notice Regarding Forward Looking Information:
This news release contains certain "forward-looking information" within the meaning of applicable Canadian securities law. Forward-looking information is frequently characterized by words such as "plan", "continue", "expect", "project", "intend", "believe", "anticipate", "estimate", "may", "will", "potential", "proposed" and other similar words, or information that certain events or conditions "may" or "will" occur. This information is only a prediction. Various assumptions were used in drawing the conclusions or making the projections contained in the forward-looking information throughout this news release. Forward-looking information includes, but is not limited to: the proposed licensing of the Facility and the expected timing to obtain all necessary licenses required for the proposed operation of the Facility, political change, future legislative and regulatory developments involving cannabis; competition and other risks affecting the Company in particular and the cannabis industry generally.
A number of factors could cause actual results to differ materially from a conclusion, forecast or projection contained in the forward-looking information in this release including, but not limited to, whether: JVCo is able to obtain and maintain a cultivation and sales license; the Facility can be completed in the manner currently proposed or at all; JVCo can obtain all necessary governmental and regulatory permits and approvals for the Facility, and whether such permits and approvals can be obtained in a timely manner; and general economic, financial market, regulatory and political conditions in which the Company and JVCo operate will remain the same. Additional risk factors are disclosed in the revised annual information form of the Company for the financial year ended December 31, 2017 dated May 24, 2018.
New factors emerge from time to time, and it is not possible for management to predict all of those factors or to assess in advance the impact of each such factor on the Company's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking information. The forward-looking information in this release is based on information currently available and what management believes are reasonable assumptions. Forward-looking information speaks only to such assumptions as of the date of this release. In addition, this release may contain forward-looking information attributed to third party industry sources, the accuracy of which has not been verified by the Company. The purpose of forward-looking information is to provide the reader with a description of management's expectations, and such forward-looking information may not be appropriate for any other purpose. Readers should not place undue reliance on forward-looking information contained in this release.
The forward-looking information contained in this release is expressly qualified by the foregoing cautionary statements and is made as of the date of this release. Except as may be required by applicable securities laws, the Company does not undertake any obligation to publicly update or revise any forward-looking information to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results, or otherwise.
Neither TSX Venture Exchange 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.