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Saturday, November 28, 2020

Aurora Cannabis Inc (OTCMKTS:ACBFF) May Have Put in a Key Low

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We noted a few days ago that a bounce was underway in Aurora Cannabis Inc (OTCMKTS:ACBFF). The move has continued to take the stock back up to test key resistance – and former support – at the $5/share level. To help further flesh out the story, the company just announced, in connection with the spin-out of its subsidiary Australis Capital Inc., Australis has received a receipt for its final prospectus.

According to the company’s most recent release, “The Final Prospectus was filed with the securities regulatory authorities in all provinces and territories of Canada and is available under Australis’ SEDAR profile at www.sedar.com. Receipt of the Final Prospectus will permit Aurora’s Board of Directors to set the Record date of the transaction, which the company expects the Board will announce within the coming days. Additionally, Australis received conditional approval to list its shares and warrants on the Canadian Securities Exchange, as well as completed an oversubscribed private placement for proceeds of $17 million.”

Aurora Cannabis Inc (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 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. The Company operates a 55,200 square foot, state-of-the-art 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 a 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, based in Germany.”

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As noted above, the stock has been on the mend and now confronts key resistance at the $5 level as we head into next week. Last week brought about 7% in overall gains on rising average volume.

“The spin-out of Australis delivers additional value to Aurora’s shareholders while creating a vehicle with considerable upside potential,” said Terry Booth, CEO of Aurora.

“Australis provides its shareholders with access to deal-flow in the U.S market, where many successful operators have struggled to access growth capital in an opportunity-rich market. With a deeply networked and experienced management team and a strong balance sheet, Australis is well positioned to capitalize in the U.S. by acquiring attractively priced cannabis assets with high growth potential. The non-brokered, substantially oversubscribed private placement that Australis recently completed to fuel its growth is a reflection of investor appetite for access to U.S. cannabis assets while recognizing the Australis team’s domain expertise and successful track record of operating in highly regulated and rapidly evolving industries. We look forward to providing additional updates shortly on our progress towards the distribution.”

Earning a current market cap value of $2.8B, ACBFF has a significant war chest ($231M) of cash on the books, which must be weighed relative to about $2.6M in total current liabilities. One should also note that debt has been growing over recent quarters. ACBFF is pulling in trailing 12-month revenues of $42M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 211.1%. This is an exciting story, and we look forward to a follow-up chapter as events 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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