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Agraflora Organics International Inc
Symbol C : AGRA
Shares Issued 357,552,580
Close 2018-12-18 C$ 0.175
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Agraflora says Delta facility is 2nd biggest in Canada

2018-12-19 13:47 ET - News Release

Mr. Derek Ivany reports

AGRAFLORA ORGANICS 2.2 MILLION SQUARE FOOT DELTA FACILITY IS THE SECOND LARGEST CANNABIS GREENHOUSE IN CANADA

Agraflora Organics International Inc. (formerly PUF Ventures Inc.) released a three-stage timeline last week for the retrofitting of its new greenhouse facility in Delta, B.C. What they did not relay to the public at the time, however, is that this 2.2-million-square-foot facility in Delta now represents the second largest cannabis greenhouse facility in Canada (among those that are currently physically built). Agraflora's Delta facility is second in size only to the Smiths Falls facility owned by Canopy Growth Corp., the world's largest cannabis company and it is larger than the other two biggest cannabis facilities in Canada. Agraflora's Delta greenhouse is 100,000 square feet larger than Aurora Cannabis Inc.'s facility in Edmonton, and it is also more than 700,000 square feet larger than the current size of the Leamington facility owned by Aphria Inc.

With this substantial square footage, of course, also comes the potential for significant plant growth and sales. According to Agraflora chief executive officer Derek Ivany, the facility in Delta will be capable of producing "... approximately 0.12 kg [of cannabis flower] per square foot," allowing it to boast an annual production capacity of 250 million grams of high-quality cannabis product, and Agraflora has already solidified offtake agreements with two major cannabis organizations in Canada in order to provide themselves with potential future sales outlets. Agraflora became part of Canopy Growth's CraftGrow Family in 2017, and, in an announcement released this past Thursday, Agraflora stated that Namaste Technologies, through its wholly owned subsidiary Cannmart Inc, will have the right of first refusal on the purchase of up to 25 million grams of cannabis from Agraflora at a price of $4 per gram. The Namaste arrangement alone represents up to $100-million in potential future revenue for Agraflora.

The greenhouse in Delta was secured through a partnership with the Houweling's Group, and it is this partnership that will also help Agraflora both maximize the growing potential of the facility, and ensure that it is up and running on schedule. The Houweling's Group brings 40 years of greenhouse experience and growing expertise to the project as well as a plethora of established infrastructure. The Houweling's Group is a fully vertically integrated organization with a total of 8.4 million square feet of greenhouse space in Canada and the United States, and more than 200 employees. They have employee groups working in growing, harvesting, distribution, administration, information technology and finance, and this means that they are fully self-sufficient.

In order to finance Agraflora's plans for retrofitting the greenhouse in Delta, Agraflora has secured another $7.5-million in financing from the Delta Organic Cannabis Corp. In September of 2018, Agraflora entered into a $40-million equity participation and earn-in agreement with DOCC, a privately held Toronto-based investment company managed by some of Canada's leading cannabis investors, and so far $20-million of this money has already been provided. On Oct. 18, an initial tranche of $12.5-million was secured, while the most recent $7.5-million came through on Dec. 10. Both tranches were purchased at a share price of approximately 45 cents.

As stated previously, Agraflora will be retrofitting their Delta greenhouse in three stages, aiming to make the facility fully operational by 2021. The first stage will include the completion of 350,000 square feet of growing space and 100,000 square feet of postproduction facilities and is scheduled to be completed in the second quarter of 2019. The second stage will include an additional 1.45 million square feet to be completed by the fourth quarter of 2019. Finally, another 400,000 square feet of space will be completed by the end of 2020.

With all of these aspects combined, Agraflora has placed themselves in an enviable position within the Canadian cannabis industry. Not only does the company have one of the top three largest cannabis greenhouses in the country, but they also have the financing, expertise, infrastructure and sales outlets needed to maximize the potential of the project.

About Agraflora Organics International Inc.

Agraflora Organics International is a growth-oriented and diversified company focused on the international cannabis industry. It has ownership in several cannabis companies including AAA Heidelberg and Propagation Services Canada in Canada, and is actively pursuing other opportunities within the cannabis industry. Agraflora Organics has an option to purchase 100 per cent of AAA Heidelberg, a licensed producer under the Access to Cannabis for Medical Purposes Regulations.

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