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Agraflora Organics International Inc
Symbol AGRA
Shares Issued 873,905,880
Close 2019-10-01 C$ 0.19
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Agraflora spends over $30M on PPE at phase 1 Delta

2019-10-02 06:48 ET - News Release

Mr. Brandon Boddy reports


Agraflora Organics International Inc. has provided a summary of the phase 1 Delta greenhouse complex infrastructure upgrades completed to date. Agraflora has deployed over $30-million in plant, property and equipment expenditures (PPE) at its phase 1 Delta greenhouse complex retrofit in preparation for receipt of its standard cultivation licence from Health Canada.

Agraflora's Delta greenhouse complex is second in size and magnitude only to the Smiths Falls facility owned by Canopy Growth Corp., the world's largest cannabis company. By way of additional comparison, Agraflora's Delta facility is 100,000 square feet larger than Aurora Cannabis Inc.'s facility in Edmonton, Alta., and it is also more than 700,000 square feet larger than the current size of the Leamington facility owned by Aphria Inc.

Milestone infrastructure upgrades, directly correlated to Agraflora's anticipated award of a standard cultivation licence, which were highlighted in the company's recent affirmation of readiness and video evidence package submission to Health Canada, include:

  • Completion of perimeter security fencing;
  • Installation of comprehensive surveillance and anti-intrusion systems, as well as access control infrastructure supported by servers and sustained by independent, backup generators;
  • Completion of postharvest zones including dry rooms, trim room, secure storage and packaging facilities;
  • Installation of state-of-the-art air exchange system equipped with climate and odour controls;
  • Full roof vent insect netting installation for crop protection;
  • Supplemental light output upgrades and the furnishing of light deprivation screens;
  • Installation of irrigation buffer tanks, mixing stations and distribution system;
  • Retrofit and upgrade of Argus Titan climate control system;
  • Completion of grow room divisions for climate and hygiene isolation;
  • Retrofitting of garment hygiene rooms, security/administration offices, as well as staff amenities.

Agraflora's internal forecasts indicate that upon receipt of its aforementioned standard cultivation licence from Health Canada, the company will become the fourth-largest licensed producer (LP) in Canada by 2020 financed production metrics, strategically positioned in close proximity to Canada's largest cannabis economic centres: Toronto and Vancouver.

Issuer                        2020 estimated annual       Current market
                                capacity (in grams)       capitalization

Aurora Cannabis                         700,000,000       $5,938,602,000
Canopy Growth Corp.                     525,000,000      $10,521,098,000
Aphria                                  255,000,000       $1,733,854,000
Agraflora & PSC                         251,250,000         $157,303,000
Tilray                                  225,000,000    $3,121,407,270.00
The Green Organic Dutchman              195,000,000         $559,266,000
Cronos Group                            150,000,000       $4,084,620,000
OrganiGram Holdings                     113,000,000         $710,615,000
Hexo Corp.                              108,000,000       $1,344,018,000

The Delta facility is a state-of-the-art pressurized, semi-open Venlo greenhouse, which is widely considered to be one of the most technically advanced and environmentally friendly greenhouse operations in the world. The company's forecasted production metrics are further substantiated by the Delta greenhouse complex's industry-leading cultivation infrastructure, including:

  • Fully integrated on-site natural-gas-powered power plant:
    • Providing ample heat and electricity, while repurposing carbon dioxide emissions to benefit the plants;
  • Proprietary energy-efficient air exchange;
  • Advanced climate and humidity control management infrastructure;
  • Ebb-and-flow watering systems to enhance complete irrigation recapture and water treatment;
  • 1.5-million-gallon hot water storage tank configured to store energy produced during the day, for redistribution during non-peak hours, thereby increasing operational efficiencies and reducing associated energy costs;
  • Multistage supplemental lighting augmented by natural sunlight to foster optimized illumination equilibrium.

Brandon Boddy, chairman and chief executive officer of Agraflora, stated: "Our flagship Delta greenhouse complex is projected to achieve industry-leading cultivation metrics, approximately 0.12 kilogram of premium cannabis flower per square foot, with estimated packaged unit contribution of 80 cents per gram. With two significant offtake agreements already in place, representing 125 million grams over a five-year period, Agraflora is primed to realize material cash flows over the next 12 months and beyond.

"Agraflora's esteemed JV partners, the Houweling's Group, bring 40 years of greenhouse experience and agricultural expertise to the project, as well as established infrastructure with a replacement cost of circa $190-million. 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."

The company plans to commence phase 2 of the Delta greenhouse complex retrofit in December of 2019, which will include:

  • 10 flower rooms with over one million square feet of canopy;
  • 40,000 square feet of EU-GMP postharvest/processing space:
    • Equipped with ozone-rich drying rooms;
  • Installation of an industrial kitchen;
  • Workflow design to include commercial CO2 (carbon dioxide) and ethanol extraction capabilities.

About Agraflora Organics International Inc.

Agraflora is a growth-oriented and diversified company focused on the international cannabis industry. It owns an indoor cultivation operation in London, Ont., and is a joint venture partner in Propagation Service Canada and its large-scale 2.2-million-square-foot greenhouse complex in Delta, B.C. The company has a successful record of creating shareholder value and is actively pursuing other opportunities within the cannabis industry.

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