Aurora Sky cannabis facility’s price tag soars to CA$150 million

The cost to build Aurora Sky – one of the biggest cannabis facilities in Canada – has jumped to 150 million Canadian dollars ($115 million), Aurora Cannabis said in a regulatory filing released this week alongside its earnings report.

That’s a substantial increase from May 2017, when the company estimated the cost of the project to be roughly CA$110 million.

The increase highlights the difficulty – and capital burden – facing Canada’s largest marijuana companies as they build massive cultivation facilities to meet demand for the country’s looming recreational cannabis market, which starts Oct. 17.

Alberta-based Aurora also said Sky is on schedule and nearly fully operational. The company anticipates the facility will produce more than 8,000 kilograms of cannabis per month by the beginning of 2019.

Despite the increased cost, Aurora said it expects Sky to pay for itself “in a very short number of months,” assuming average pricing and margins on sales to provinces.

Aurora is constructing other so-called “Sky Class facilities” – Aurora Sun in Medicine Hat, Alberta, and Aurora Nordic in Denmark – which are expected to have combined production capacity of roughly 270,000 kilograms per year when complete.

Aurora’s “Sky Class” facilities are massive-scale, indoor facilities with specialty glass roofs and “closed systems” that enable managers to maintain full control of all environmental variables, the company said.

Aurora said that once the efficiencies from automation, scale and yield expertise are realized, it expects production costs per gram to decrease significantly to “well below CA$1 per gram.”

Five of Sky’s 17 production rooms are licensed and in production, and Aurora anticipates submitting the license applications for the final rooms in November.

Takeaways from Aurora’s fiscal 2018 earnings

  • Aurora completed 11 acquisitions, and one is in progress.
  • The company said it intends to list its shares on a senior U.S stock exchange.
  • Fourth-quarter revenue rose 223% to CA$19.1 million.
  • Active registered MMJ patients rose 164% to 43,308 in the quarter
  • Revenue rose 206% in fiscal year 2018 to CA$55 million compared to fiscal 2017.
  • The number of employees grew to 1,400 from 300 at the end of fiscal year 2017.

Aurora’s shares are traded on the Toronto Stock Exchange as ACB.

Matt Lamers can be reached at [email protected]

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3 comments on “Aurora Sky cannabis facility’s price tag soars to CA$150 million
  1. Maxcatski on

    270,000 kilograms per year? That’s absolutely ridiculous, given there was no legal market only a short time ago. 270,000 kilograms is a lot of pot. However, Aurora better hope to pay off their facilities before outdoor cultivation takes root.

    Health Canada will release new regulations one year after legalisation. The cost will drop to pennies a kilogram for field grown cannabis.

    Reply
    • James Massimino on

      Hey,the way we must see this is ,as was said before,AURORA is basically a copycat ,or blueprint of exacxtly what AMAZON went through to get where they are today.
      The delussion and investments may look a bit risky to some,but IMO, they are definately on track to follow AMAZONS foot prints.
      I love this stock s ways of progressing with a aggressive determined goal,also slowly showing thier potentcial as they build what I believe will dominate the entire sector in time.It,s all about MANAGEMENT,it can make or break any co.,I do,nt see a breaking co. anywhere in site when I look thier way.

      Reply
  2. alex on

    they better hope that their product is better than hundreds of thousands of Kilograms of other producers coming online at the same time or they will have problems repaying their inorganic growth

    Reply

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