Shares of MGC Pharmaceuticals Ltd. (ASX:MXC) (OTC:MGCLF) skyrocketed today on news of a highly lucrative supply contract with a Korean cosmetics manufacturer.
MGC signed a binding terms and conditions supply agreement with Varm Cosmo Inc. for its MGC Derma division to supply five of its cannabidiol, a.k.a. CBD, cosmetic products in bulk form, to be sold to consumers as part of Varm Cosmo’s cosmetics range.
“This watershed milestone supply agreement is transformational for our MGC Derma division and for MGC Pharmaceuticals as a company, and importantly for all our shareholders. It marks the culmination of much work in building our operations and our brand within this emerging market over the past 12 months, as well as development work for our proprietary formulations by our MGC Pharmaceuticals research team in Europe. Varm Cosmo are a great company to partner with to bring our cosmetics product to a wider consumer market," commented Roby Zomer, Co-founder and CEO of MGC Pharmaceuticals.
With a minimum agreed purchase quantity of 15,000kg per month (3,000kg per SKU) the expected deal will generate approximately $40 MM AUD in annual revenue for MGC Derma. The MGC Derma division is a 51:49 joint venture with well-credentialed cosmetic manufacturer, Dr. M. Burstein Ltd, of which MGC Pharmaceuticals owns 51% and holds management control.
This expected transformational deal will deliver an immediate revenue stream with a strong gross profit margin to the Company. An initial $3.3 MM AUD in revenue will be received shortly after the receipt of the first quarterly purchase order from Varm Cosmo, which is expected by the end of October 2017.
JungYoon Hwang, CEO of Varm Cosmo commented, "“We produce the most honest cosmetics in the market. Our products contain 1ml of highest purity CBD in the world. Providing the most effective moisturizing solution while making your skin young and healthy. Our partnership with MGC Pharmaceuticals gives us the opportunity to enhance our product line, while remaining true to our core beliefs. We look forward to working with MGC Pharmaceuticals in the coming years.”
MGC Pharmaceuticals is set to become Australia’s first listed medical marijuana company to generate significant revenues, expected to be in excess of $3 MM AUD in monthly sales. For more Australian marijuana stocks, check out our ASX marijuana stock database.
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