Invictus MD Strategies (IMH.C) made a significant move to bolster its portfolio when the company announced today that it had entered into a binding Letter of Intent (LOI) for an option to acquire 100% of a late-stage Access to Cannabis for Medical Purposes Regulations (ACMPR) applicant.
For the time being, let’s refer to the applicant as OptionCo as their name is yet to be released.
So according to the press release, OptionCo, has already had its pre-License inspection from Health Canada and expects the license to cultivate under the ACMPR to arrive shortly.
OptionCo has constructed 60,000 square feet of secured perimeter for its current production facility which is located on 150-acre property expected to produce up to 6,000 kg annually.
OptionCo has also submitted plans for additional buildings on its property including a 30,000-square foot facility.
Based on receiving cultivation approval, OptionCo will continue to expand on the property.
Invictus has sole option to exercise the option within 30 days after OptionCo receives its license to cultivate.
Details of the transaction call for Invictus to provide a cash payment of $4.0 million as well as issuing 21.0 million common shares of Invictus within ten days of exercising the option. OptionCo will also receive 3.0 million warrants with an exercise price of $1.50 per warrant.
Said warrants have scheduled expiry dates with 1.0 million of those warrants expiring six months after the option has been exercised. Another 1.0 million of those warrants will expire 12 months from the date of the option be exercised and the remaining 1.0 million of those warrants will expire 18 months after the option is exercised.
If Invictus is able to complete due diligence to its satisfaction, it will enter into a definitive agreement on or before February 24, 2017.
Invictus Chairman and CEO, Dan Kriznic, commented on the milestone, “Once the option to acquire a 100% interest in OptionCo is exercised, along with the previously acquired interest in AB Laboratories, a licensed producer under the ACMPR, Invictus MD will have significant land holdings for cannabis cultivation in Canada to meet the significant demand. From day one, Invictus MD has viewed acquiring production capacity under the ACMPR as a key driver to increasing shareholder value.”
He went on to illustrate, “According to a recent report from the consulting firm Deloitte “Recreational Marijuana – Insights and Opportunities”, the Canadian retail cannabis market is projected to be between $4.9 billion and $8.7 billion annually. In that same report, Deloitte further estimates that satisfying the recreational cannabis market will mean producing 600,000 kilograms of marijuana annually – far more than the existing licensed producers under the ACMPR grow for medicinal purposes.”
That’s a lot of marijuana and when recreational marijuana becomes a thing in Canada, it’s going to give companies like Invictus an amazing blue sky opportunity.
FULL DISCLOSURE: Invictus MD Strategies is an EQUITY.GURU client.