Previously to be a single stage project, Cann Group (ASX:CAN) will now develop its new medicinal cannabis production facilities near Mildura in Victoria in stages.
Originally announced in March, Cann Group said in late August an amended design for the Mildura facility would increase full production capacity by 40% to 70,000kg of dry flower per annum. At that time it stated an expectation of annual revenues of approximately $220 million to $280 million based on the wholesale price of dried cannabis flower at that point. Cann’s major shareholder and strategic partner, Aurora Cannabis Inc, gave the green light for the revised design.
The cost of the entire expanded project was estimated at $184 million and to date the company has spent $47 million, which included acquisition of the site and existing buildings.
Under the new staged approach for the facility, which hasn’t been finalised yet, the first stage is expected to enable annual production of ~25,000kg of dry flower. The first stage commissioning target is late 2020, but this will be subject to funding and regulatory approvals, licences and permits being issued.
The timetable for stages 2 and 3 are yet to be determined and will be based on an ongoing assessment of product demand.
“Staging the commissioning of the Mildura facility over time will help ensure that our production capacity more closely matches anticipated growth in demand for medicinal cannabis,” said Cann Group CEO, Peter Crock last week.
In other recent news from the company, early this month Cann announced it was launching a range of imported medicinal cannabis products for supply in Australia to approved Special Access Scheme (SAS) patients through a distribution agreement inked with Symbion Pty. Ltd.. Symbion supplies healthcare related services and products to more than 4,000 retail pharmacies and 1,300 hospitals across the country.
Cann’s shares have copped a pounding over the last few months; dropping from $2.02 on August 28 – a spike on the back of the Mildura expansion announcement and other news – to 74c at the close of trade last Friday. The new week didn’t improve things, with shares closing at 44c yesterday.