viewCann Group Ltd

Cann Group signs non-binding agreement to purchase Mildura site in VIC for production of medicinal cannabis

In the near term the company will continue its focus on the production of medicinal cannabis at its existing southern and northern facilities in Melbourne for supply to Australian patients.

The new facility is expected to have a production capacity of 50,000 kilograms of dry flower per annum

Cann Group Ltd (ASX:CAN) has entered into a non-binding heads of agreement (HOA) to purchase a site within the Mildura region in northwest Victoria.

The company intends to construct a state-of-the-art greenhouse for large scale cultivation and production of medicinal cannabis to service both domestic and export markets.

Cann Group has also entered into a five-year agreement with Aurora Cannabis Inc for the offtake of medicinal cannabis produced by the company at its existing and planned expansion facilities until 2024.

Large scale cultivation

Cann Group chief executive officer Peter Crock said the decision to secure and proceed with the Mildura site ensures the company can maintain its projected timelines to large scale cultivation, with the new greenhouse expected to be fully commissioned in the third quarter of calendar year 2020.

“This is particularly important given the offtake agreement we have executed with our strategic partner Aurora Cannabis, who has committed to purchase all of our production in excess of that required for patients here in Australia.

“The Mildura site offers other important advantages including a lower total build cost and lower ongoing operating costs due to the dryer climate and higher sunlight hours resulting in reduced power use.”

Site works to begin immediately

The new offtake agreement will see Cann Group supply good manufactured practice (GMP) processed dry flower, extracted resin and manufactured medicinal cannabis products to Aurora until 2024, covering Cann Group’s full production capacity beyond that produced for domestic needs.

Crock said specialised components and materials are in transit to Australia with site works to begin immediately.

“This puts us on the same build start timing as was originally envisaged for Tullamarine and is consistent with our strategy to develop a hub and node model of regional cultivation facilities and a central manufacturing hub.”

When completed it is expected that the new 34,000-square-metre greenhouse will be the largest purpose-built medicinal cannabis production facility in Australia.  

Quick facts: Cann Group Ltd

Price: 0.69 AUD

Market: ASX
Market Cap: $186.35 m

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