Newstrike Resources Stock Surges Following Health Canada Ruling

Newstrike Resources Ltd. (TSXV:HIP) is attempting to merge with CanniMed Therapeutics, which is being pursued by Aurora Cannabis

SmallCapPower | January 8, 2018: Newstrike Resources Ltd. (TSXV:HIP), a Canadian marijuana stock, climbed 40% to $1.51 on Friday after announcing that it has received approval from Health Canada to sell cannabis in dried marijuana form. The Company had received its cultivation license on December 19, 2016.

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Newstrike Resources is the owner of the marijuana producer Up Cannabis, and is based in Brantford, Ontario. Newstrike has three production sites at Brantford, Grimsby and Creemore. Currently, the Brantford facility has a cultivation license with a production capacity of 3,000 kgs. The other two facilities are still under construction and Newstrike Resources expects total production to reach ~10,000 kgs by the end of 2018.

Additionally, Newstrike Resources has a partnership with the Canadian musical artists, The Tragically Hip. This partnership will help the Company to capture the recreational market. Newstrike Resources intends to develop a diverse network of high-quality cannabis brands that addresses the needs of medical clients and eventually, as the law allows, adult consumers.

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Newstrike Resources CEO Jay Wilgar said, “We are delighted to have achieved this major strategic milestone in our growth strategy. We already have a significant inventory in place, a supply agreement with CanniMed, and a unique marketing strategy being developed with our creative partners, The Tragically Hip. Up Cannabis is extremely well-positioned to succeed and very excited to launch when the adult-use market opens in the coming months.”

Newstrike Resources is also attempting to merge with CanniMed Therapeutics Inc. (TSX:CMED), which is ‘in play’ following a hostile takeover bid by Aurora Cannabis Inc. (TSX:ACB). Aurora Cannabis contends that merging with Newstrike Resources is not in the best interest of CanniMed shareholders, seeing that Newstrike has “no revenues, no patients, as its business model faces significant challenges,” according to a statement by Aurora.

On January 2, 2018, Newstrike Resources entered into a Supply Agreement with CanniMed Therapeutics, which CanniMed said could yield it roughly $15 million in revenue.

Newstrike Resources shares have soared more than 330% in the past three months and currently are trading at Price to Book ratio of 45.76x.

Disclosure: Neither the author nor his/her family own shares in any of the companies mentioned above.

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