Emerald’s Pure Sunfarms Joint Venture Acquires Second 1.1 Million Square Foot Greenhouse, Doubling Potential Production Cap...
April 01 2019 - 6:00AM
Emerald Health Therapeutics, Inc. (“Emerald”) (TSXV: EMH; OTCQX:
EMHTF) today announced that its 50%-owned joint venture, Pure
Sunfarms, has exercised its option to acquire from Village Farms
International, Inc. (“Village Farms”) a second 1.1 million square
foot (25 acre) greenhouse (“Delta 2”) adjacent to Pure Sunfarms’
existing 1.1 million square foot cannabis operation (“Delta 3”) in
Delta, BC. Pure Sunfarms expects to reach its annualized full
production run-rate of approximately 75,000 kilograms by mid-year
at Delta 3 and expects to double its overall production on
completion of the conversion of Delta 2. Emerald has also entered
into an agreement with Pure Sunfarms to purchase 25% of its
aggregate cannabis production from Delta 3 and Delta 2 in 2020,
2021 and 2022.
“We could not be more pleased with the progress
and production of Delta 3 and this significant expansion of Pure
Sunfarms to 2.2 million square feet of production space, making it
one of the largest single cannabis cultivation facilities in
Canada,” said Dr. Avtar Dhillon, President and Executive Chairman
of Emerald. “The first greenhouse, fully licensed for 1.03 million
square feet of cultivation and expected to be fully planted in
April, is a well-designed operation generating impressive yields
that continue to increase. Quality and cost will differentiate
producers among competitors in the Canadian and global cannabis
market over the long term, and Pure Sunfarms’ ability to produce
large-scale, low cost, high quality cannabis made it a simple
decision for us to support the exercising of its option to acquire
the second 1.1 square foot greenhouse. We are excited by the amount
of cannabis supply Emerald will be receiving over the next four
years from Pure Sunfarms with the extension and expansion of our
current supply agreement. Combining the Pure Sunfarms supply with
our other cannabis and large-scale hemp supply sources, Emerald is
anticipating significant quarterly growth of revenues in 2019 and
beyond.”
The existing technologically-advanced Delta 3
greenhouse design is based on decades of large-scale, low-cost
agricultural production experience and extensive cannabis
expertise, resulting in a state-of-the-art facility with 16 grow
rooms optimized with supplemental lighting and other systems to
support year-round harvesting.
The Delta 2 facility is a newer, but nearly
identical, facility located adjacent to Delta 3. Pure Sunfarms
expects to realize economies of scale from the concentration of 2.2
million square feet of production area at a single location.
Notably, Delta 3 was designed with an automated nursery capable of
serving both Delta 3 and Delta 2. This will allow a greater
proportion of the footprint of the Delta 2 facility to be devoted
to flower rooms than in Delta 3.
Planning and procurement for the Delta 2
facility and Pure Sunfarms’ applications for licensing under the
Cannabis Act will begin immediately. An important competitive
advantage for the Delta 3 and 2 facilities is that Pure Sunfarms
has secured 48 megawatts of electricity from BC Hydro, providing a
reliable and inexpensive source of power to run supplemental
lighting and post-harvest equipment in both Delta 3 and Delta 2.
This electricity will be available this September. Pure Sunfarms is
targeting its first harvest at the Delta 2 facility for mid-2020
and aims to achieve full run-rate production in the fourth quarter
of 2020, subject to the receipt of Health Canada licenses.
In accordance with the terms of the Pure
Sunfarms joint venture agreement, Village Farms is contributing the
Delta 2 facility to the joint venture and Emerald has committed to
contribute an aggregate of CAD$25 million in cash, of which $2.5
million was contributed at closing and the remainder will be
advanced in tranches as needed to cover initial construction costs.
Conversion of the Delta 2 facility to cannabis production is
estimated to cost approximately CAD$60 million, based on the
conversion costs incurred for conversion of the Delta 3 facility.
Following Emerald’s investment, the remainder of the conversion
costs are expected to be funded by cash flow generated by Pure
Sunfarms.
Pure Sunfarms continues to hold an option to
acquire a third 2.6 million square foot (60 acre) greenhouse from
Village Farms. This option expires on September 28, 2021.
About Emerald Health Therapeutics,
Inc. Emerald Health Therapeutics, Inc. is a Canadian
licensed producer of cannabis. Its 50%-owned Pure Sunfarms joint
venture in BC is licensed to cultivate cannabis in 1.03M square
feet of its first 1.1 million square foot greenhouse, the capacity
of which is estimated to exceed 75,000 kg of cannabis annually.
This facility has been scaling up production over the last four
quarters and is expected to be fully planted in April 2019.
Emerald’s Verdélite operation in Québec is completing the build-out
of its 88,000 square feet indoor cultivation facility and scaling
up its high quality production. Emerald has secured over 500 acres
of hemp harvest in 2018 and has contracted for approximately 1000
acres in 2019 to 2022, with the objective of extracting low-cost
cannabidiol from the hemp. Emerald’s team is highly experienced in
life sciences, product development, large-scale agri-business, and
marketing, and is focused on developing proprietary, value-added
cannabis products for medical and adult-use customers.
Emerald is part of the Emerald Health group,
which represents a broad array of companies focused on developing
pharmaceutical, botanical, and nutraceutical products developed to
provide wellness and medical benefits by interacting with the human
body’s endocannabinoid system.
Please visit www.emeraldhealth.ca for more information or
contact: Rob Hill, Chief Financial Officer (800) 757 3536 Ext. #
5
Emerald Investor Relations (800) 757 3536 Ext.
#5invest@emeraldhealth.ca
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release.
Cautionary Note Regarding Forward-Looking
Statements: Certain statements made in this press release that are
not historical facts are forward-looking statements and are subject
to important risks, uncertainties and assumptions, both general and
specific, which give rise to the possibility that actual results or
events could differ materially from our expectations expressed in
or implied by such forward-looking statements. Such statements
include conversion of the Delta 2 facility to cannabis production;
licensing of the Delta 2 facility; realizations of economies of
scale; the proportion of Delta 2 facility devoted to growing
products; contributions of cash to Pure Sunfarms; other sources of
financing for construction at the Delta 2 facility; availability of
power; production and processing capacity of various facilities;
expansion of facilities and timing thereof; anticipated production
costs; and receipt of hemp deliveries.
We cannot guarantee that any forward-looking
statement will materialize, and readers are cautioned not to place
undue reliance on these forward-looking statements. These
forward-looking statements involve risks and uncertainties related
to, among other things, failure to obtain regulatory approvals;
failure to obtain necessary financing; results of production and
sale activities; results of scientific research; regulatory
changes; changes in prices and costs of inputs; demand for labour;
demand for products; as well as the risk factors described in the
Company’s annual information form and other regulatory filings. The
forward-looking statements contained in this press release
represent our expectations as of the date hereof. Forward-looking
statements are presented for the purpose of providing information
about management's current expectations and plans and allowing
investors and others to obtain a better understanding of our
anticipated operating environment. Readers are cautioned that such
information may not be appropriate for other purposes. The Company
undertakes no obligations to update or revise such statements to
reflect new circumstances or unanticipated events as they occur,
unless required by applicable law.
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