Hancock Prospecting will own a 10 per cent stake in Western Australian medicinal cannabis company Little Green Pharma after participating in a $27.2 million capital raising.
Hancock Prospecting will own a 10 per cent stake in Western Australian medicinal cannabis company Little Green Pharma after participating in a $27.2 million capital raising.
Little Green Pharma announced the placement to fund its acquisition of a $21.5 million ($C20 million) medical cannabis facility in Denmark from Canopy Growth Corporation.
The site meets the European Union’s cultivation standards and includes a 21,500 square metre cultivation site and a 4,000 square metre post-harvest.
Half of the purchase will be paid at completion and the other 50 per cent will be paid in 12 months’ time.
The raising will also fund the build-out of the company’s European sales team and working capital requirements.
The placement includes 45.3 million ordinary shares which will be issued at 60 cents each to existing institutional and sophisticated investors.
Hancock Prospecting, owned by Gina Rinehart, which has interests in iron ore, coal, beef, dairy and mineral exploration and development, has committed $15 million.
Hancock Prospecting general manager business development Dan Wade said the company hoped the investment would help thousands of Australian and overseas patients access cannabis medicines.
“We believe medical cannabis has a vital role in helping to treat a range of chronic conditions, and we’re pleased to support an Australian medical cannabis company in LGP that continues to put patients first and contribute to the development of this helpful and emerging industry,” Mr Wade said.
Little Green Pharma managing director Fleta Solomon said the acquisition of the Denmark facility was a step change for the company.
“We have been speaking for some time about the need to increase our production capacity and the Denmark Facility not only gives us the cultivation and manufacturing capacity we need but does so immediately,” Ms Solomon said.
She said regulations in Denmark offered more flexibility to expand than Western Australia, which will be eight times bigger than the company’s previously planned expansion.
“We won’t be constrained by the two-year build and permitting time required to expand our existing West Australian facility,” she said.
Ms Solomon said the company would keep its facility in the South West for long term growth but were now able to redeploy significant investment they had planned.
“We are well positioned in the market to capitalize on the brand equity LGP has built in Europe and Australia, with the Denmark facility providing immediate access to medical grade product at volumes that will allow us the opportunity to accelerate our growth strategy,” she said.
Shares in Little Green Pharma were up 8.5 per cent to 70 cents at 11:45am AWST.
