Gina Rinehart’s mining business, Hancock Prospecting, has tipped $15 million into a $27.2 million capital raise by local medicinal cannabis venture Little Green Pharma.
The raise comes as the five-year-old Western Australian ASX venture, which produce medical grade CBD and THC cannabis products for Australia, the UK and Germany, announced the acquisition of medicinal cannabis production facility in Denmark for A$21.4 million.
Shares in Little Green Pharma (ASX:LGP) rose nearly 11% to $0.72 cents today on the news.
The company said had received firm commitments to raise A$27.2 million from existing investors, including $15 million from Hancock Prospecting, which will hold more than a 10% stake in the business.
Hancock Prospecting’s general manager of business development Dan Wade said the mining giant believes medicinal cannabis has a vital role in helping to treat a range of chronic conditions.
“In supporting the company’s investment in its new facility and becoming a substantial shareholder, we hope to help many thousands of Australian and overseas patients access much-needed cannabis medicines,” he said.
The Denmark facility has a 21,500 m2 cultivation site and 4,000 m2 post-harvest manufacturing site, with the capacity to produce more than 12 tonnes of cannabis flower annually. NASDAQ-listed Canadian venture Canopy Growth Corporation is selling the site to LGP and under the terms of the deal, LGP will pay 50% of the C$20 million acquisition cost on completion and 50% in 12 months.
LGP managing Director Fleta Solomon said the acquisition was a step change for the business.
“We have been speaking for some time about the need to increase our production capacity and the Denmark facility not only gives us the cultivation and manufacturing capacity we need but does so immediately. We won’t be constrained by the two-year build and permitting time required to expand our existing West Australian facility,” she said.
“The Denmark facility provides more than eight times the capacity of our previous planned production expansion.”
Solomon said the European site gives the business both cost and time savings.
“We’ll keep our foot on our Australian property for longer term growth but are now able to redeploy the significant capex investment we had planned,” she said.
The $27.2 million raise will be allocated partly towards the acquisition, as well as to build out of the company’s European sales team, capital expenditure works and working capital requirements.
Trending
Daily startup news and insights, delivered to your inbox.