Aphria Diamond cost creeps higher as first marijuana sales pushed to March

Federally regulated cannabis producer Aphria expects the first harvest from its Diamond facility in Leamington, Ontario, to be sold to provincial wholesalers in March, capping off a year-plus delay from when shipments were initially expected to start.

Aphria expected Diamond to be completed in time for its first sale in January 2019 – a goal long-since abandoned – as the 1.3-million-square-foot greenhouse was not approved by Health Canada for cultivation until Nov. 1, 2019.

Besides attributing the setback to receipt of the federal cultivation permit, some of the infrastructure for the greenhouse experienced a two-month delay due to an Ontario Ministry of Transportation approval requirement because the facility was located adjacent to a provincial highway.

Aphria Diamond is a 51%-owned Aphria subsidiary. Double Diamond Farms owns the rest of the company.

Since securing cultivation approval, Aphria Diamond was able to lock up a three-year term loan worth 80 million Canadian dollars ($60 million) arranged by an unidentified chartered bank.

In a news release, the company said the proceeds would be “strategically deployed.”

Aphria said it expects the facility to be 70% planted this week.

At full capacity, Aphria Diamond will add 140,000 kilograms (308,647 pounds) of annualized cannabis production to Aphria’s cultivation portfolio, reaching 255,000 kilograms when the producer’s other facilities are included.

Health Canada pegs the country’s annualized cannabis demand at roughly 900,000 kilograms, raising the specter of looming oversupply for the industry.

The latest cost breakdown of the Diamond facility is:

  • CA$10.2 million of initial capital was provided to the venture by Aphria.
  • CA$9.8 million was provided by Double Diamond Farms.
  • CA$42.4 million was spent acquiring 100 acres of land, including 32 acres of greenhouses.
  • CA$82 million of additional costs were incurred for the greenhouse retrofit and operational equipment as of Aug. 31.

Aphria’s other facility in Leamington was fully authorized by Health Canada to begin cultivation in March 2019 at a total cost of around CA$190 million.

The Canadian company reported cash and cash equivalents of CA$464 million as of Aug. 31.

Aphria trades as APHA on both the New York Stock Exchange and Toronto Stock Exchange.

Matt Lamers is Marijuana Business Daily’s international editor, based near Toronto, Ontario. He can be reached at [email protected].
One comment on “Aphria Diamond cost creeps higher as first marijuana sales pushed to March
  1. Kevin M Pegues on

    Why does aurora cannabis keep doing things that dilute shares. Like when they offered that promisarry note that made it crash. Do they not care about their shareholders? I’ll never buy aurora again. It’s seems to be a big scam. Take the.money and run.

    Reply

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