Cann Group has announced a A$24.3m capital raise, while acknowledging progress in building its new production facility outside Mildura has slowed due to Covid-19.
The company entered into a trading halt on Wednesday pending further details of the capital raise. Today, it announced a Placement and Share Purchase Plan to provide working capital for its near-term growth plans.
Despite progress slowing on the Mildura build, Cann said it remained critical to its growth strategy.
In a statement to the ASX, it said: “Covid-19 impacts have slowed progress of potential funding options for Mildura as well as the practical timing of any construction, due to the need to engage European-based specialist contractors. All funding options for the Mildura expansion continue to be pursued, including a bank debt facility.”
It added discussions with a tier one Australian bank had taken longer than expected but remained confident its established revenue stream would strengthen the business case for external funding.
Cann Group is forecasting revenues of $15m in FY21 from existing supply contracts in the UK, Germany, New Zealand and Australia.
The Mildura facility incorporates a 34,000sqm greenhouse and 12,000sqm of processing and support facilities. Cann Group has invested around $50m on it so far, completing site works, service connections and the construction of a superstructure that can produce up to 70,000kgs of cannabis dry flower annually.
The company plans to commission the project in stages, with stage one enabling a production capacity of 12,500kgs at a cost of $65m-$75m and a nine-month build time.
Earlier this month, the Victorian Government announced its support for the project and confirmed a grant of almost $2m under its Regional Jobs Fund.
Cann Group CEO Peter Crock said the company is executing on its strategy to consolidate a leadership position in the Australian market and supply expanding markets around the world.
He added: “Cann is now established as a vertically integrated medicinal cannabis company with strong capabilities and partnerships across its research, cultivation, manufacturing, product development and distribution activities.
“We have strong commercial momentum and we are confident of generating meaningful near-term sales while we continue to develop new and exciting medium and longer term market opportunities.”