How To Value AURORA CANNABIS IN COM NPV (OTCMKTS:ACBFF)

How To Value AURORA CANNABIS IN COM NPV (OTCMKTS:ACBFF)

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AURORA CANNABIS IN COM NPV (OTCMKTS:ACBFF) is another pullback candidate in the Canadian cannabis patch right now. The company has been very aggressive in building out its lateral skill-set from an operational standpoint, which is why the stock has been a consistent favorite on this site.

To push that dynamic, the company just announced that further to the companies’ joint press release of June 5, 2017, both parties have agreed to a 17-day extension, through November 6, 2017, on the 140-day term under which Aurora was granted certain exclusive rights to negotiate with Radient in respect to the acquisition of certain exclusive rights to use Radient’s technology and processes, as further set out in the original memorandum of understanding, dated December 13, 2016.

According to the release, good progress has been made towards finalizing the agreement, and both parties have agreed that the inclusion in the negotiations of certain additional items warrants an extension to the original 140-day term. This is a far more complicated announcement than it may seem on its face, and we take a look at the story below. But first, let’s grab an overview of this company.

AURORA CANNABIS IN COM NPV (OTCMKTS:ACBFF) is a licensed producer of medical marijuana pursuant to the Marijuana for Medical Purposes Regulations and operates a 55,200 square foot expandable state-of-the-art production facility in Alberta, Canada.

ACBFF’s wholly-owned subsidiary, Australis Capital Inc., seeks to be an active participant in the U.S. Cannabis market. Aurora is trading on the Canadian Securities Exchange under the trading symbol “ACB”. The company is headquartered in Vancouver, Canada.

According to company’s materials, “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, is currently constructing a second 800,000 square foot production facility, known as “Aurora Sky”, at the Edmonton International Airport, and has acquired, and is undertaking completion of a third 40,000 square foot production facility in Pointe-Claire, Quebec, on Montreal’s West Island. In addition, the Company holds approximately 9.6% of the issued shares (12.9% on a fully-diluted basis) in leading extraction technology company Radient Technologies Inc., based in Edmonton, and is in the process of completing an investment in Edmonton-based Hempco Food and Fiber for an ownership stake of up to 50.1%. Furthermore, Aurora is the cornerstone investor with a 19.9% stake in Cann Group Limited, the first Australian company licensed to conduct research on and cultivate medical cannabis. Aurora also owns Pedanios, a leading wholesale importer, exporter, and distributor of medical cannabis in the European Union (“EU”), based in Germany.”

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This announcement references a prior announcement from back in June. And, wouldn’t you know it, that announcement referenced a still-prior one from six months earlier.

On December 14, 2016, Radient and Aurora executed a Memorandum of Understanding to evaluate an exclusive partnership for the Canadian market with regard to the joint development and commercialization of superior and standardized cannabinoid extracts. “The first element of the collaboration was the execution of a joint research project to assess the feasibility of applying Radient’s proprietary technology for the extraction of cannabinoids from cannabis, including the establishment of parameters of extraction yields, recovery rates of available cannabinoids, purity of the extracts obtained, and the determination of cannabinoids and terpene profiles. The feasibility study also included an assessment of the potential processing throughput achievable using Radient’s large-scale continuous-flow MAPTM extractor, based upon established extraction conditions.”

Then, in June of this year, the company announced the successful completion of their Joint Venture Research Activity, confirming the effectiveness of Radient’s proprietary MAPTM Technology and associated continuous flow design for extracting cannabinoids from dried cannabis.

This latest announcement has extended the timeframe the companies have to iron out all the details. To us, that only serves to underscore the potential importance this deal may have for ACBFF. We know this management team has been effective in diversifying rev streams and putting the company’s massive stockpile of cash to work recently. This should be right up their alley.

Currently trading at a market capitalization of $846.8M, ACBFF has a significant war chest ($159.8M) of cash on the books, which must be weighed relative to virtually no total current liabilities. ACBFF is pulling in trailing 12-month revenues of $18.1M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 386.5%. We will update the story again soon as developments transpire. Sign-up for continuing coverage on shares of $ACBFF stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in $ACBFF, either long or short, and we have not been compensated for this article.

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