JSE-listed Labat has concluded an agreement for the acquisition of 80% of the shares and claims in Lima Romeo Air, known as Sweetwater, which is a fully operational South African Health Products Regulatory Authority-approved medicinal cannabis cultivation facility in Kenton-on-Sea in the Eastern Cape of South Africa.
The R10-million purchase price will be funded through the company’s cash resources.
The effective date of the acquisition is March 1.
As previously announced, Labat has a secured offtake agreement with buyers in Europe, particularly Switzerland and Germany, for the supply of cannabis products.
Since the dual listing of Labat in Frankfurt, Labat says it has been regularly approached by international buyers of cannabis flower, for the supply of high-quality tetrahydrocannabinol flower from South Africa.
The Eastern Cape-based operation will be supported by a team of highly skilled breeders, growers and researchers, Labat says.
This operation currently has an offtake agreement in place with an Australian pharmaceutical client and has also recently facilitated a number of transactions for the supply of cannabis to Europe.
Labat will use its funding lines and in-house expertise to make significant capital investments into the current facility and upgrade the existing infrastructure to increase the current production capacity from 500 kg/y to 1.8 t/y, the company says.
The capital investment will also be used to set up a European Union Good Manufacturing Processes, or EU-GMP, processing facility on the site with the assistance of a German pharmaceutical company.
The acquisition of the Eastern Cape-based facility provides Labat with additional medical and pharmaceutical infrastructure in support of its Healthcare Strategy and enables Labat to accelerate delivery on the offtake agreement with a Swiss pharmaceutical group, the company notes.
The assets acquired through the acquisition of Sweetwater include all operating assets of the cultivation facility, including 1.5 ha of land, a 1 100 m2 aquaponic growing facility, five growing tunnels and 216.27 kg of dried stock, 10 kg of which has been presold to Australia and does not form part of the acquisition.
In line with the Labat Healthcare Roadmap, it is envisaged to establish the Ace Genetics Nursery for the African Genome and Landrace project at the same location, towards the commercialisation of the Ace Genetics Seedbank in the third quarter.
Meanwhile, following the successful listing on the Frankfurt Stock Exchange, investors are now able to trade in Labat Frankfurt-listed shares on an international brokerage platform.
Labat says it continues to engage various trading platforms to allow local investors to trade on the Frankfurt exchange.