Aurora Cannabis Inc. (TSX:ACB) inks LOI to supply a minimum of 5,000 kg of cannabis per year for the Quebec adult consumer market
SmallCapPower | February 20, 2018: Aurora Cannabis Inc. (TSX:ACB) Wednesday announced that it has signed a Letter of Intent (LOI) with the Société des Alcools du Québec (SAQ) to supply a minimum of 5,000 kg of cannabis per annum for the Quebec adult consumer market, once legalized.
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According to the LOI, Aurora Cannabis will provide a wide variety of premium products to the Quebec market on a monthly basis. The supply quantity will be ascertained based on month-on-month demand with at least 5,000 kg for the first year with no upper cap.
Aurora Cannabis CEO Terry Booth said, “This LOI is significant in terms of product volume, and an important step in our commercial development. It also reflects our strong commitment to the Quebec market, where we have two production facilities, as well as access to significant additional supply through our partnership with The Green Organic Dutchman, once their Valleyfield facility is completed. We are pleased to be working closely with the SAQ and look forward to becoming a key supplier of Canada’s second most populous province with more than eight million people.”
Aurora Cannabis is one of the six cannabis growers that have signed with Quebec authorities to supply marijuana and related products for its recreational market. The others are Canopy Growth Corporation (TSX:WEED), MedReleaf Corp. (TSX:LEAF), Tilray, Aphria Inc. (TSX:APH), and The Hydropothecary Corporation (TSXV:THCX).
In another recent development, Aurora Cannabis and Liquor Stores closed strategic investment deal through a non-brokered private placement by which Aurora Cannabis has taken minority stake in Liquor Stores. The two-phased deal includes issuance of 6.9 million Liquor Stores’ common shares at $15.00 per share aggregating to $103.5 million and 2.3 million subscription receipts of Liquor Stores at $15.00 per subscription receipt aggregating to $34.5 million. Aurora Cannabis currently owns 19.9% stake of Liquor Stores and will increase its ownership to ~25% after approval from the shareholders of Liquor Stores.
Driven by higher average sales price and strong Germany sales coupled with higher patient numbers, Aurora Cannabis’ revenue grew 200% YoY to $11.7 million for its second quarter of 2018. In terms of valuation, Aurora Cannabis trades at market capitalization of $4.96 billion with price-to-book ratio of 8.67x.
Disclosure: Neither the author nor his/her family own shares in any of the companies mentioned above.
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