Aphria Inc. (TSX:APH)(OTC:APHQF)(FRA:10E) announced today that the company has entered into a strategic partnership with Nuuvera, a Canadian-based international cannabis company. The partnership is initially focused on Canada, but includes joint relationships between Aphria and Nuuvera to expand production across the globe.
Although you may not be familiar with Nuuvera, you may have heard of their Canadian Licensed Dealer subsidiary, Avanti Rx Analytics. Avanti Rx Analytics has an importation agreement in place with International Cannabis Corp. (CSE:ICC) and has a MOU with Emblem Corp. (TSXV:EMC) to establish a CBD importation framework.
Related: International Cannabis Corp. Enters Into Importation Agreement With Avanti RX
Nuuvera also owns late-stage ACMPR applicant, Avalon Pharmaceutical. Avalon Pharmaceutical is currently in the final stages of the "review" step of the ACMPR application process and has received its "letter to build" from Health Canada.
Related: 7 Stages of the ACMPR Application Process
As part of the partnership Aphria and Nuuvera entered into five separate and distinct agreements:
Aphria invested $2 million in a Nuuvera common share offering
Aphria and Nuuvera entered into a supply agreement whereby Aphria will supply Nuuvera with 1,500 kgs annually. This will increase to 17,000 kgs upon completion of Aphria's four-part expansion plan in 2018.
For cash compensation of $4 million CAD, Aphria will sell 100 of the 200 acres of land that it owns on Mersea Road 8 ("Mersea Property") in Leamington to Nuuvera. Nuuvera intends to build a 1 million square foot "state-of-the-art, Dutch-style greenhouse" and 350,000 square feet of infrastructure on the property.
Aphria will provide consulting services on the design and construction of Nuuvera's facility in exchange for 8% of Nuuvera's cost to build the Mersea facility (separate from the purchase of the land).
In exchange for a fee of $0.10 CAD per gram harvested in Nuuvera's Mersea facility, Aphria will provide operational services to Nuuvera. Based on Aphria's current expected yield from its 1 million square feet of greenhouse, Aphria estimates that this agreement has the potential to yield a payment of more than $10 million CAD per year to Aphria (upon the full buildout of Nuuvera's greenhouse).
Management Commentary
Aphria's Chief Executive Officer, Vic Neufeld
"This is an exciting strategic partnership for Aphria and Nuuvera. By combining our unparalled experience in cannabis production with Nuuvera's extensive international network, we will bring the best of two leaders to meet the growing global demand for cannabis. This partnership is further recognition by the global cannabis industry of the strength of our greenhouse growing intellectual property, and of Aphria's strategy to monetize it, in order to create additional shareholder value". We look forward to building a long-term partnership with Nuuvera to create an even more valuable presence in the market."
Nuuvera's Chief Executive Officer, Lorne Abony
"Through this partnership, Nuuvera will be one of the largest Canadian producers with one of the lowest cost production facilities in Canada and internationally. We are thrilled to partner with Aphria, a true pioneer in harnessing the power of the sun to grow pharma-grade medical cannabis."
Conclusion
For more information on Aphria, be sure to check out the company's marijuana stock profile in our Canadian licensed producer database. Stay tuned for more on Nuuvera and the other publicly traded companies (hint, hint) that have invested in or who have partnerships with this rapidly emerging global cannabis company.
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