Cann Group unveiled a A$24.3m capital raise while revealing that construction of its planned production facility near Mildura has been hampered by the Covid-19 pandemic.
After initiating a trading halt on Wednesday, the company introduced a Placement and Share Purchase Plan designed to fund its immediate expansion objectives.
Even with construction delays at Mildura, the company maintained that the facility remains essential to its expansion roadmap.
In a statement to the ASX, it said: "Covid-19 impacts have slowed progress of potential funding options for Mildura as well as the practical timing of any construction, due to the need to engage European-based specialist contractors. All funding options for the Mildura expansion continue to be pursued, including a bank debt facility."
The company noted that negotiations with a leading Australian bank had progressed more slowly than anticipated, though it remains confident that its existing revenue base will make the case for additional external funding.
The company projects FY21 revenues of $15m based on current supply agreements across the UK, Germany, New Zealand, and Australia.
“All funding options for the Mildura expansion continue to be pursued, including a bank debt facility.”
The facility design includes a 34,000sqm greenhouse alongside 12,000sqm of processing and support infrastructure. To date, the company has committed approximately $50m toward the project, finishing site preparation, utility connections, and erecting a structural framework capable of producing up to 70,000kgs of dried cannabis annually.
The rollout will occur in phases, with the initial phase targeting 12,500kgs of production capacity at an estimated expenditure of $65m-$75m over a nine-month construction period.
The Victorian Government signaled its backing for the venture earlier this month, delivering a grant of nearly $2m through its Regional Jobs Fund.
Peter Crock, Cann Group's chief executive, said the company is executing its strategy to strengthen its standing in the Australian market while expanding its reach into growing international markets.
He added: “Cann is now established as a vertically integrated medicinal cannabis company with strong capabilities and partnerships across its research, cultivation, manufacturing, product development and distribution activities.
“We have strong commercial momentum and we are confident of generating meaningful near-term sales while we continue to develop new and exciting medium and longer term market opportunities.”
