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What does Eco Equity do?
Eco Equity is developing a medicinal cannabis cultivation business in Zimbabwe, with a vertically integrated operation in Antigua.
The company, which is examining a possible dual flotation in the UK and Canada, holds a licence in Zimbabwe to export into the European Union.
Refined oil and botanical flower, both certified under EU good manufacturing practice (GMP), will both be exported to wholesalers to fulfil existing off-take agreements in the EU, as per the licence.
Zimbabwe-born chief executive Jon-Paul Doran, formerly a Citigroup financier, founded the company after moving out of the City into the cannabis industry.
Eco Equity is forecasting initial annual production of around 15,470kg of EU-GMP cannabis flower, and 1,591kg of EU-GMP oil. Wholesale establishments will be used to fulfil off-take agreements in the EU regions.
When fully operational, this is expected to generate annual revenues of around US$34-35mln based on current prices and off-take agreements.
In the UK, Guernsey-domiciled JPD Capital has been launched as the investment vehicle that funds Eco Equity and potentially other investments in the medicinal cannabis industry. This is the primary vehicle for investors.
How is it doing?
In July, analysts at accounting and consultancy firm Baker Tilly valued the company at US$210mln in July following an assessment of its operations.
The firm said Baker Tilly had met with the executive team of its cultivation project in Zimbabwe and were “very impressed” with its business model and operational progress.
Using a weighted valuation method, Eco Equity said the valuation from the consultancy’s report meant its shares were currently worth 56p each compared to the investment price of 10p each in the firm’s first round fundraising.
In June, the firm announced a GBP10.2mln convertible loan note offer to fund the development of its medicinal cannabis cultivation project in Zimbabwe, with several off-take agreements having been secured once production is up and running.
Construction is well underway at the company’s property in Zimbabwe, with the essential water supply and a mix of solar and generator power secured.
A research and development facility is nearing completion and the ground had been readied for the poly-tunnels and state of the art glass greenhouse.
Cultivation in Zimbabwe was due to start in the second quarter of 2020, but coronavirus restrictions delayed that until the end of the year.
A retail brand, Eco710, is intended for launch in the UK in coming months.
Later this year in August, the company said it will refocus its investments away from the tourism and dispensary sector in the Caribbean due to the disruption of the tourism and cruise ship industry caused by the coronavirus pandemic.
What the boss says, chief executive J-P Doran
“Medicinal cannabis has proved itself to be one of the more resilient industries during the coronavirus pandemic,” said chief Jon-Paul Doran in June.
“We’ve got a tremendous team in terms of cultivation and one thing we want be renowned for is quality and consistency,” he said.
“We are also working to ensure the price per gramme stays low, as that it really is our competitive advantage.”
“We’ve firmly been concentrating on the cultivation side of things and medicinal applications and markets. But for us to move onto the next level in terms of CBD, it was essential for us to move into the retail space so we will be launching our retail brand.”
On the potential for an IPO, he said: “We have got different options, we may look at dual-listing. For now, we are talking to corporate advisers about the best strategy and we will deliver on what’s best for our investors, be that the NEX market [now the Aquis Stock Exchange], AIM or in Canada on the TSX.”
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Inflection points
- There are growing numbers of clinical trials focused on cannabis-derived medicines, including for treating Covid-19, auto-immune diseases and cancer
- Once export begins, Eco Equity will be one of only seven producers with an EU export licence under GMP standards
- Eco Equity is confident about pharmaceutical demand, with letters of intent received for potential off-take agreements far surpassing the amount that the company would be able to produce by several years
- Acquisitions are mooted
- The retail launch is on the way
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