VANCOUVER, Jan. 16, 2020 /CNW/ - Zenabis Global
Inc. (TSX: ZENA) ("Zenabis" or
the "Company") is pleased to provide an update on its
recent facility construction and licensing activities, sales and
marketing highlights and recent cannabis production results.
Kevin Coft, Chief Executive
Officer of Zenabis, stated, "We have now achieved steady-state
operations at Zenabis Atholville, where our focus has transitioned
to driving further cultivation efficiencies. In November we had our
initial harvest at Zenabis Langley which, while significantly under
the design capacity, achieved very high THC results, including our
Ultra Sour cultivar yielding 26.5% total THC. This highlights the
ability of our Langley closed
greenhouse design to grow high-quality cannabis."
Cannabis Production Summary
In November 2019, Zenabis realized
a total harvest weight of 3,332 kg of dried cannabis.
The amount harvested at Zenabis Atholville for the three months
ending November 2019 exceeded the
revised design capacity of the flower rooms by an average of 2.8%,
compared to 13.7% in the three-month period ending October 2019. A month-to-month comparison of
actual harvests compared with harvest forecast based on revised
design capacity between January 2019
and November 2019 for Zenabis
Atholville is provided in the table below.
Revised Design
Capacity
Performance at Zenabis
Atholville
|
Jan
2019
|
Feb
2019
|
Mar
2019
|
Apr
2019
|
May
2019
|
June
2019
|
July
2019
|
Aug
2019
|
Sept
2019
|
Oct
2019
|
Nov
2019
|
Total
|
Actual Harvest Weight
(kg)
|
474
|
480
|
518
|
809
|
908
|
756
|
1,238
|
1,912
|
2,089
|
3,586
|
2,810
|
15,580
|
Revised Design
Capacity
Harvest Weight (kg)1
|
467
|
643
|
539
|
796
|
895
|
716
|
1,097
|
1,357
|
1,715
|
3,601
|
2,940
|
15,015
|
Difference
(kg)
|
7
|
(163)
|
(21)
|
13
|
13
|
40
|
141
|
555
|
374
|
(15)
|
(130)
|
564
|
Difference (%) –
Revised
"Performance Ratio"
|
1.5%
|
(25.3%)
|
(3.9%)
|
1.6%
|
1.5%
|
5.6%
|
12.9%
|
40.9%
|
21.8%
|
(0.4)%
|
(4.4)%
|
3.8%
|
|
1 The
Revised Design Capacity Harvest Weight was derived by converting
the actual square footage of flower room space and the forecast
canopy for each
specific flower room into a kilograms per room per day figure based
on Zenabis' historical yield data at the Zenabis Atholville
facility based on the yield
performance in the three months ending June 2019 for revised Design
Capacity. The Revised Design Capacity Harvest Weight in the table
above is the
harvest weight that would have resulted if the Design Capacity
Yield Per Day for a room was multiplied by the Effective Flower
Room Equivalent Days, as
defined under "Performance Ratio"
|
Zenabis Langley's initial harvest produced 342 kg of dried
cannabis, which is approximately 20% of its design capacity.
Zenabis has identified a variety of ramp-up challenges, which have
generally been addressed, with the exception of lighting. Zenabis
is in the process of installing additional lighting improvements,
in order to improve yield in the fall and winter seasons. While the
yield from Zenabis Langley's initial harvest was lower than the
initial forecast, the quality of cannabis produced was high based
on the cannabinoid yield of the cultivars harvested. The first
harvest from Zenabis Langley recorded the Company's second highest
ever THC result for Ultra Sour with 26.5% total THC, and three of
the cultivars harvested (Ultra Sour, Wappa and MK Ultra) achieved
above the company's expected total THC yield. Please refer to the
table below for a summary of the total THC yield by cultivar from
Zenabis Langley's first harvest.
Cultivar
|
Realized Total
THC2
|
Max. Expected
Total THC
|
Citrique
|
17.5%
|
19.0%
|
MK Ultra
|
22.8%
|
19.0%
|
Sensi Star
|
15.5%
|
16.0%
|
Ultra Sour
|
26.5%
|
21.0%
|
Wappa
|
19.7%
|
18.0%
|
|
2 Total THC levels on any finished
goods sold may differ from the Realized Total THC. Realized Total
THC was derived by analytical testing performed by
a third-party laboratory on the particular lot
|
In November 2019, Zenabis
completed 15 harvests at Zenabis Atholville, one harvest at Zenabis
Langley and one harvest in Stellarton.
Harvest Forecast – Zenabis Atholville, Zenabis Stellarton and
Zenabis Langley Site A – Part 1
For its existing licensed facilities of Zenabis Atholville,
Zenabis Stellarton and Zenabis Langley Site A – Part 1, Zenabis
expects to produce approximately 7,7763 kg of dried
cannabis from December 2019 through
to January 2020. The following table
sets out Zenabis' estimated aggregate monthly harvests for Zenabis
Atholville and Zenabis Stellarton and Zenabis Langley Site A – Part
1 for the next two months.
|
July
2019
|
Aug
2019
|
Sept
2019
|
Oct
2019
|
Nov
2019
|
Dec
2019
|
Jan
2020
|
Total
|
Forecast
(kg)3
|
1,212
|
1,579
|
1,731
|
3,758
|
3,881
|
4,200
|
3,576
|
23,943
|
Actual
(kg)
|
1,238
|
1,996
|
2,089
|
3,586
|
3,332
|
|
|
12,241
|
|
3 This forward-looking estimate of
future harvest results is based on the following material
assumptions: (1) Zenabis Stellarton operates at the published
design capacity on a room by room basis for the cultivation space
that is licensed and in cultivation at the forward-looking periods
noted; (2) Zenabis Atholville
rooms operate based on the current flower schedule and continue to
achieve revised Design Capacity; and (3) the first harvest from
Zenabis Langley Site
A – Part 1 in November 2019 is 20% of Design Capacity
|
Zenabis intends to provide monthly cultivation results for
Zenabis Langley upon receipt of all cultivation license amendments
for these phases and once this facility is operating at a stable
state. Once Zenabis completes the construction and licensing of its
facilities and enters into steady state production, harvest
forecasts will no longer be provided and instead actual production
achieved will be disclosed in our quarterly MD&A.
Construction and Facility Update
Zenabis Langley
Zenabis Langley Part 1 and Part 2A are licensed and operational.
Zenabis has reached substantial completion on Part 2B. Zenabis has submitted a cultivation license
amendment for Part 2B in December 2019 and expects to receive Health
Canada approval of that amendment in Q1 2020. Construction of
Zenabis Langley Part 2C consists of a design capacity of 32,000 kg
and is ongoing but at a reduced pace as the Company's main focus
for Zenabis Langley is to achieve operational excellence and
operate at a steady state.
A summary of construction status by phase is provided below:
Phase
|
Design
Capacity
|
Description
|
Part 1
|
9,900 kg
|
• Licensed and
operational
|
Part 2A
|
39,400 kg
|
• Licensed and
operational
|
Part 2B
|
14,800 kg
|
• Consists of 38,000
sq. ft. of flower room space (one flower room)
• Substantially
complete
• Licensed amendment
submitted in December 2019
|
Part 2C
|
32,000 kg
|
• Consists of 82,200
sq. ft. of flower room space (two flower rooms) and
122,300 sq. ft. of other operational spaces (includes drying
rooms,
packaging rooms, mother space and vegetation space)
• HVAC, flooring and
shade screen installation is ongoing
• Security equipment
and lighting installation is substantially complete
|
Zenabis Stellarton
Zenabis has submitted a sales license application for Zenabis
Stellarton and expects to use this site as a fulfilment centre and
packaging/processing facility upon receipt of this license.
Zenabis Delta
As the Company continues to focus on becoming cash flow
positive, the further conversion of Zenabis Delta is under
review to assess whether its analytical and laboratory
services are justified by market demand. Zenabis is also
considering other plans for the Delta facility if it determines market demand
is insufficient.
Licensing Update
Zenabis is currently in the process of various licensing
applications for Zenabis Delta, Zenabis Langley, Zenabis Stellarton
and the Zen Craft Grow program as outlined in the table below:
License
Submission
|
Submission
Month
|
Annual Design
Capacity
|
Zenabis Delta –
Analytical Testing
|
May 2019
|
N/A
|
Zen Craft Grow –
Grower 1
|
July 2019
|
350 kg
|
Zenabis Stellarton –
Sales License
|
October
2019
|
N/A
|
Zenabis Langley Site
A – Part 2B
|
December
2019
|
14,800 kg
|
Zenabis Langley Site
A – Part 2C
|
TBD4
|
32,000 kg
|
4 Expected
submission timeline subject to receipt of prior license or license
amendment for each facility
|
Sales and Marketing Update
Shoppers Drug
Mart
Zenabis recently received its first purchase order of medical
cannabis for the Shoppers Drug Mart ("Shoppers") platform,
Medical Cannabis by Shoppers.
Medical cannabis patients can soon purchase Zenabis' premium
dried flower, light softgels, and cannabis oil from Shoppers'
online platform, which recently announced the completion of its
national roll-out.
Ontario Cannabis Store
Zenabis recently completed its first shipment to Ontario
Cannabis Store ("OCS"). The fulfilment of the purchase orders
placed by OCS will shortly see a range of Zenabis pre-roll and
dried flower products enter the largest Canadian provincial
market5, under the Zenabis-owned Namaste (www.namaste.com) and
Blazery (www.blazery.com) brands.
As operations ramp-up in multiple locations resulting in a
significantly greater number of harvests per month, more time will
be required to consolidate data and release publicly as part of our
regular Operational Updates. Consequently, the Company expects to
release its Operational Updates for a given month within 6 weeks
following the end of such month.
Please view the following link for Zenabis operational update
presentation:
https://www.zenabis.com/docs/zenabis-operations.pdf
About Zenabis
Zenabis is a significant Canadian licensed cultivator of medical
and recreational cannabis, and a propagator and cultivator of
floral and vegetable products. Zenabis employs staff
coast-to-coast, across facilities in Atholville, New Brunswick; Delta, Aldergrove, Pitt
Meadows and Langley, British
Columbia; and Stellarton, Nova
Scotia. Zenabis currently has 96,400 kg of licensed cannabis
cultivation space across four licensed facilities. Zenabis has 3.5
million square feet of total facility space dedicated to a mix of
cannabis production and cultivation and its propagation and floral
business.
Zenabis expects its Zenabis Atholville, Zenabis Stellarton and
Zenabis Langley facilities to have a licensed annual production
capacity of 143,200 kg of dried cannabis by the end of 2020. The
Zenabis brand name is used in the cannabis medical market, the
Namaste, Blazery, and Re-Up brand names are used in the cannabis
adult-use recreational market, and the True Büch brand name is used
for Zenabis' kombucha products.
_______________________________
|
5
https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1310038301
|
Forward Looking Information
This news release contains statements that may constitute
"forward-looking information" within the meaning of applicable
Canadian securities legislation. Forward-looking information may
include, among others, statements regarding the future plans,
costs, objectives or performance of Zenabis, or the assumptions
underlying any of the foregoing. In this news release, words such
as "may", "would", "could", "will", "likely", "believe", "expect",
"anticipate", "intend", "plan", "estimate" and similar words and
the negative form thereof are used to identify forward-looking
statements. In this news release, forward-looking statements
relate, among other things, to: the projected kilogram yield of
licensed facility space and facility space in the process of, or
scheduled for, construction and/or licensing; our expectations for
future harvests, including the THC yield of those harvests; the
expected timing and completion of current and planned conversion,
expansion and optimization of our facilities, including Zenabis
Langley; our plans for Zenabis Delta; the expected submissions of
license amendment applications and site evidence packages; the
licensing of our facilities and projected timing thereof; our
expectations for our extraction projects, equipment and capacity;
our expectations for processing output;; and the expected content
of future operational updates. Forward-looking statements should
not be read as guarantees of future performance or results, and
will not necessarily be accurate indications of whether, or the
times at or by which, such future performance will be achieved. No
assurance can be given that any events anticipated by the
forward-looking information will transpire or occur.
Forward-looking information is based on information available at
the time and/or management's good-faith belief with respect to
future events and are subject to known or unknown risks,
uncertainties, assumptions and other unpredictable factors, many of
which are beyond Zenabis' control. These risks, uncertainties and
assumptions include, but are not limited to, those described in the
shelf prospectus dated April 9, 2019,
a copy of which is available on SEDAR at www.sedar.com and could
cause actual events or results to differ materially from those
projected in any forward-looking statements. Furthermore, any
forward-looking information with respect to available space for
cannabis production is subject to the qualification that management
of Zenabis may decide not to use all available space for cannabis
production, and the assumptions that any construction or conversion
would not be cost prohibitive, required permits will be obtained
and the labour, materials and equipment necessary to complete such
construction or conversion will be available. Accordingly, readers
should not place undue reliance on the forward-looking statements
and information contained in this news release. Zenabis does not
intend, nor undertake any obligation, to update or revise any
forward-looking information contained in this news release to
reflect subsequent information, events or circumstances or
otherwise, except if required by applicable laws
For more information, visit: https://www.zenabis.com.
SOURCE Zenabis Global Inc.