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Aphria Inc
Symbol APH
Shares Issued 160,234,898
Close 2018-01-05 C$ 19.16
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Aphria arranges 120,000 kg/yr cannabis supply by 2019

2018-01-08 08:12 ET - News Release

Mr. Vic Neufeld reports

APHRIA SECURES ADDITIONAL 120,000 KGS OF EXPECTED ANNUAL CANNABIS PRODUCTION FOR JANUARY 2019

Aphria Inc. has entered a strategic relationship (GrowCo) with Double Diamond Farms, a local greenhouse grower, to provide an additional 120,000 kilograms of annual cannabis production. The deal accelerates Aphria's capacity increase by over a year versus building out its existing 100-acre site. Combined with Aphria's existing expected cannabis production of 100,000 kilograms, Aphria will have, what it believes to be, the largest fully financed production capabilities in the industry in 2019. Aphria anticipates that all 220,000 kg of expected annual cannabis production will be available for sale in January, 2019, pending Health Canada approvals.

"Since the Aphria journey began in early 2014, a key pillar to the Aphria success story has been our unwavering commitment to powered by the sun, and nowhere is that more effective than in Leamington, Ont., where average daily sunlight hours, intensity of optimum lighting and moderate climate provides for ideal greenhouse growing," said Vic Neufeld, chief executive officer. "Building on our Leamington advantages, I am very excited to announce that Aphria has entered into another acquisition of Dutch greenhouse campus in the Leamington area. Partnering with Double Diamond, a major local greenhouse grower, Aphria will have access to almost 32.0 acres (just less than 1.4 million square feet of greenhouse) plus 72,000 of infrastructure to service not only the almost 32 acres, but a future build of another 32 acres. Double Diamond is an industry-recognized leader in growing various produce using the greenhouse technology advancements, and brings solid talent and a labour pool necessary to support the annual incremental capacity of over 120,000 kg."

Owners of Double Diamond, Chris and Benji Mastronardi, are pleased to have the opportunity to pair Double Diamond Farms' growing experience with Aphria's growing experience and sales expertise. "It made our decision to partner with Aphria an easy choice," said Chris Mastronardi, chief executive officer of Double Diamond Farms. "The staff at Double Diamond Farms are excited about this new challenge and to be able participate in the burgeoning medical and adult recreational use cannabis markets," said Benji Mastronardi, president and chief operating officer of Double Diamond Farms.

Double Diamond, a 49-per-cent partner in GrowCo, will supply the land, new state-of-the-art Dutch-style greenhouses, existing infrastructure and employees for the venture. Aphria, holding a controlling 51-per-cent interest in GrowCo, will supply its standard operating procedures, quality oversight and will apply for a second Health Canada cultivation licence for the site. The 100-acre site is located on Highway 77 in Leamington, Ont., has never had another crop planted inside of it and abuts Aphria's existing second campus, comprising another 100-acre site.

GrowCo is expected to require financing of $80-million to $100-million, including acquiring the property based on appraised value, plus the cost of retrofits, power cogeneration facilities and other cannabis specific investments. GrowCo will initially be financed by a $10-million investment by each of Aphria and Double Diamond. Additional financing will be secured through traditional term debt from commercial lenders. Any shortfall in financing, will be advanced by Aphria as a loan.

About Aphria Inc.

Aphria, one of Canada's lowest-cost producers, produces, supplies and sells medical cannabis. Located in Leamington, Ont., the greenhouse capital of Canada, Aphria is truly powered by sunlight, allowing for the most natural growing conditions available. Aphria is committed to providing pharma-grade medical cannabis, superior patient care while balancing patient economics and returns to shareholders.

We seek Safe Harbor.

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