Cann Group has raised another A$40m from investors as it looks to shore up funding for its delayed production facility in Mildura.
The company had already raised $14.3m in a placement offer and will complete a share purchase plan today (Thursday) that will secure an additional $26m from 2,793 shareholders.
Cann had initially told the market it was hoping to raise a combined total of $24m.
But following strong demand from shareholders, management increased the size of the share purchase plan (SPP) from $10m to $25.9m.
Despite the oversubscribed offer, shares slipped 3% to close at $0.47c per share.
In a statement to the ASX, Cann said 14.5% of eligible shareholders participated in the SPP.
“We are extremely pleased with the confidence and support shown by our large retail shareholding base,” chief executive Peter Crock said. “The funding secured by the capital raising places the company in a very strong financial position to continue with our growth and expansion plans over the next 12 months and beyond.”
The cash will provide working capital to support its near-term plans which involve the construction of the Mildura facility.
Cann said the $40m from the capital raising will strengthen its position “in terms of securing external debt funding to proceed with the first stage of the Mildura expansion”.
The Mildura facility incorporates a 34,000sqm greenhouse and 12,000sqm of processing and support facilities. Cann Group has invested around $50m 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.
Cann said the expansion has been partially “de-risked” by a number of offtake deals to supply to business partners.
One of its deals will see dry flower, extracted resin and manufactured medicinal cannabis supplied to its strategic Canadian partner, Aurora, until 2024.
Aurora holds a 22.5% stake in Cann Group.
Cann Group is forecasting revenues of $15m in FY21 from existing supply contracts in the UK, Germany, New Zealand and Australia.