In February shares in Austrailia based AUSCANN GROUP HLDG NPV(OTCMKTS:ACNNF) were .16 cents and they were making noise in the cannabis sector from down under. They had just come public with the funding for upcoming operations and partnerships that had been in the works. Shares in nearly every cannabis stock were rallying and AusCann traded right along moving to .70 cents by the end of March. I think the concern for investors is what happened after the March 31st high as shares came back to where they started trading as low as .28 cents recently. A look at the yearly chart below shows the range trading in ACNNF so far in 2017.
Let’s look at where AUSCANN GROUP HLDG NPV (OTCMKTS:ACNNF) raised the money, (as the sell off may be related to the banker liquidating some shares). The company raised $12 million with Merchant Corporate Advisory Pty Ltd, and received strong interest from existing and new investors, both domestically and overseas.
Canopy Growth Corp who is AusCann’s strategic partner, participated in this placement maintaining their shareholding at approximately 11%. Canopy’s investment was complemented by strong interest from a range of other institutional investors including leading Australian fund manager Tribeca Investment Partners. The company issued 24m shares at $0.50 per share, representing a 16% discount to the five day VWAP of 59.6 cents per share at the time of the transaction. The shares will be issued under the Company’s available ASX Listing Rule 7.1A capacity.
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This capital raising follows on from its exclusive strategic partnership with Tasmanian Alkaloids, announced 17 May 2017, whereby the two groups will work together to exploit global market opportunities for the supply of high quality medicinal cannabis products. This partnership will seek to leverage the respective competencies of both AusCann and TasAlk and is believed to be the first industry partnership of its type. The funds raised will be used to progress the development of the Company’s cultivation facility in Western Australia, following the recent approval of its Australian medicinal cannabis licence by the Office of Drug Control, under the Narcotic Drugs Act 1967. Furthermore, the funding will progress the development of its activities in Chile with its joint venture partner DayaCann and expand its medical outreach activities among the medical community in Australia. AusCann is committed to improving the general awareness and education of the benefits of medicinal cannabis to the medical community specifically and the broader community in general.
Ms Elaine Darby, Managing Director, AusCann commented: “The strong support we have received for this capital raising continues to demonstrate the high level of investor interest in the medicinal cannabis sector in Australia. The move by the Australian Government to introduce a legal framework provides the foundation for us to advance our strategy to supply high quality and affordable medicinal cannabis to patients in need.” “Our Australian medicinal cannabis license and recent partnership with Tasmanian Alkaloids have been major milestones, advancing our development in the Australian market. We have access to expert knowledge, facilities and unrivalled skills through a range of global partnerships that give AusCann a real and sustainable competitive advantage in the market.”
Mr Bruce Linton, Chairman and CEO, Canopy Growth Corporation stated: “We are delighted to be able to continue to support the development of AusCann whom we have had a relationship with since their foundation. The Australian market is expected to develop along a similar trajectory to the Canadian market and based on this experience we expect significant growth over the coming years. Patients and their doctors will rightly expect a stable, affordable supply of high quality medicines and AusCann is in a unique position to achieve this outcome.”
AusCann Group Holdings Ltd (OTCMKTS:ACNNF) is an Australian based company that was incorporated in September 2014 and at .28 cents has a valuation of $9.2 million. They have a tight float which adds to the volatility, but will also make this add extra alpha as the cannabis markets heat up.
The bottom line is: The company is currently producing and providing high quality, affordable and clinically validated cannabis medicines to patients. Partners include: TSX listed Canopy Growth Corporation – the largest producer of medicinal cannabis globally; DayaCann – the only licensed medicinal cannabis grower in Chile; and Tasmanian Alkaloids, producer of ~40% of the world’s alkaloid raw material. We consider this an important stock to watch in the cannabis sector flying a bit under the radar down under. For continuing coverage on shares of $ACNNF stock, as well as our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!