Category Archives: CSE Quarterly

Maricann looks to replicate Canada success in newly legal German cannabis market

Anyone looking for a model company in the medical cannabis sector would be well advised to consider Maricann Group Inc (CSE:MARI), as thus far it seems to have done everything right.

With a green ethos that drives both product development and corporate efficiency efforts, Maricann succeeded in becoming one of the first companies in Canada approved to cultivate and sell medical cannabis.

Not content with being an early mover in just its home market, Maricann was quick to stake its claim in another jurisdiction largely overlooked by its peers: Germany.

On the verge of turning a profit

The combination has the company predicting profitability by the second quarter of 2018. Its top line is off to a good start, with sales currently running at $450,000 per month. And having just announced a $42.5mln non-dilutive stream financing that will fully fund its German plans, Maricann is positioned to really put its foot on the accelerator.

The strategic mix of Canadian and European markets notwithstanding, Maricann chief executive officer Ben Ward sees the company’s key point of differentiation being technology for extraction and product formulation.

“We have locked up two groups with preparative chromatography expertise in cannabis and this means we have the only ability in the industry to get all the cannabinoids, terpenes and flavonoids,” says Ward. “To formulate the plant, you first have to be able to deconstruct it to make sure you get the active pharmaceutical ingredients.”

Ward explains that there are 500 terpenes – an organic compound found in numerous plant-based products – specific to the cannabis plant, and that companies looking only at cannabinoids or THC are missing much of what cannabis has to offer. “We are focusing on whole-plant medicine, which is done by extracting all of the different isolates.”

This approach to the industry reflects the direction set for the company early on by founder Dr Eric Silver. An assistant professor and clinical teacher in the Department of Family and Community Medicine at the University of Toronto, Dr Silver knew first-hand the benefits that alternative medicine employing cannabis could have on patients. The next step was to gather colleagues from the industry with capital and know-how and begin the search for a facility to purchase.

Eventually, the team settled on the Langton facility, which had been operating under the MMAR (Marihuana Medical Access Regulations) regime established in 2001.

The facility was approved under the more robust MMPR (Marihuana for Medical Purposes Regulations) in March 2014, with a license to sell product grown at the facility arriving in December of the same year.

A green ethos going hand-in-hand with the commercial imperative

A brief analysis of the facility indicates Maricann is committed both to being a custodian of its environment and running its business with an eye on costs. Langton has its own co-generation plant to help with electricity needs and there is even a natural gas well on the property to provide some of the fuel. Other efforts include equipment to capture rainwater for use in the fertigation process.

These and other efforts lead the company to believe that it is among the most competitive producers on the Canadian landscape, with per-gram costs estimated at just $1.37. That should translate into healthy margins that really make their presence known as sales continue to ramp up.

“Our revenue generating capacity right now is restricted only by our footprint of 34,000 square feet,” says Ward. “We are building a 216,000 square foot facility and that will be able to produce another 20,000 kg of dry flower starting in the first quarter of 2018.”

As far as near-term trends are concerned, Ward is in the camp of industry executives who believe smoking cannabis will give way to ingestion in other forms over time. “We think users will come to prefer extract-based products, which is the experience in more mature markets such as Colorado and California,” Ward notes. “Once people can access a product with a consistent extract in a dose they are used to, they will opt for that. We think that is when the real adoption will take place.”

Maricann is ready with its own line of gel caps, which it developed in partnership with another company, to help that trend along.

First we conquer Canada, then we take Berlin

The Canadian operations are clearly well on their way to developing serious momentum, and the plan is to create the same success in the German market.

It was only in January of this year that Germany’s lower house of parliament, the Bundestag, voted to legalize medical cannabis. The drug will be available from pharmacies to patients with a prescription, and importantly for companies serving the market it looks like it will be covered by German health insurance.

“I think we will see almost a carbon copy of the Health Canada program as far as cultivation and regulations are concerned. The difference will be in distribution,” posits Ward. “It won’t be supplied directly to patients but through major pharmaceutical companies or wholesalers, or distribution through pharmacies. Germany’s market will likely remain medical for a long time, but from an ease of access standpoint I think it will move ahead of Canada because of the German population’s propensity to seek alternative therapies.”

Ward explains that companies hoping to grow cannabis in Germany need to possess over three years of cultivation experience, a benchmark that the team at Maricann is able to meet. The company is currently preparing an initial 150,000 square feet of space in a facility that it has the option to purchase. “All we have to do is install the tables, the fertigation system and the lights and we will be operational,” says Ward. “We are moving through the licensing process there right now.”

Ward comments that the team is happy working in jurisdictions where legalization is uniform on a federal level, contrasting the environments in Canada and Germany to that in the United States, where cannabis is illegal federally but many states have passed laws to make it legal.

“Much of the rest of the world, and especially western Europe, is moving forward with legalization in some way,” observes Ward. “There is a much larger population that Canadian companies can export our experience to, and in doing so create best in class companies that compete globally. We might only be talking five or six years, but that is a lifetime of experience in the cannabis sector. I see Canadian companies moving into other markets and helping governments with regulatory issues so that their citizens can look forward to safe, reliable access to high-quality cannabis.”

This story was originally published at www.proactiveinvestors.com on May 10, 2017 and featured in The CSE Quarterly.

Learn more about Maricann Group Inc. at https://www.maricann.com/ and on the CSE website at http://thecse.com/en/listings/life-sciences/maricann-group-inc.

Namaste Technologies moves closer to buying “vaping” online business

The acquisition by Namaste Technologies Inc (CVE:N) of various assets currently owned by Haze Industries has moved a step closer.

The Canadian company, formerly known as Next Gen Metals but now focused on medical marijuana and alternative medicines, said that it has now signed an asset purchase agreement that will see it acquire a number of web site domains, a customer list of more than 150,000 individuals plus intellectual property and goodwill of VaporSeller, an e-commerce platform for the fast-growing vaporizer and accessories market.

Namaste will pay US$500,000 in cash when the deal closes, and will hand over five million shares of the company. In addition there is any earn-out clause of US$1.5mln over a three-year period that could be triggered by revenue, margin and operational controls.

Namaste anticipates closing the transaction on or about June 30, 2016, subject to the receipt of all director and regulatory approvals, including approval of the Canadian Securities Exchange if required.

Namaste also revealed it has arranged a non-brokered private placement of at least 8.5mln units but no more than 12.5mln units at C$0.12 a pop, to raise between C$1mln and C$1.5mln.

Each unit comprises one common share of Namaste plus half a warrant; each pair of warrants would entitle the owner to exchange them for a single common share upon payment of C$0.18 any time up to 24 months after the date of issue.

The net proceeds from the offering will be used to fund cash closing costs associated with the VaporSeller transaction, inventory expansion and for general working capital purposes.

“The signing of the definitive agreements for the acquisition of VaporSeller represents a significant step forward in terms of the completion of this transaction. As the first of multiple opportunities we have identified to expand through acquisition, our management team is high focused on ensuring an efficient and effective execution of this transaction as well as a seamless integration of our current platform and VaporSeller,” said Sean Dollinger, president and chief executive officer of Namaste.

This story was originally published at www.proactiveinvestors.com on June 8, 2017 and featured in The CSE Quarterly.

Learn more about Namaste Technologies Inc at http://www.namastetechnologies.com/ and on the CSE website at http://thecse.com/en/listings/diversified-industries/namaste-technologies-inc.

The Canadian Bioceutical Corporation profits from shift to US cannabis market

Technology companies often attribute their success to a strategic “pivot” that saw them de-emphasize an early business in favour of what ultimately proved to be a better idea.

The burgeoning cannabis sector now has its own example in the form of The Canadian Bioceutical Corporation (CSE:BCC), which shifted its focus to the United States after identifying cultivation opportunities it could advance much more quickly than its founding project in Canada.

Through a strategy of acquiring existing businesses and providing capital and management expertise to accelerate their growth, the company has positioned itself to be profitable early in its young life.

With its first acquisition, completed in January 2017, The Canadian Bioceutical Corporation acquired highly profitable assets in Arizona. These were only consolidated as of January 1, so their contribution to the company’s full financial year, which ended March 31, will be limited. Still, they will provide a good indication of what can be expected in coming quarters.

The Arizona assets are the first of several that chief executive officer Scott Boyes is working to bring under the company’s umbrella. The plan is to move quickly, setting up shop in states where risk is quantifiable and businesses are available at valuations that allow for multiple expansion as capacity is expanded on both the production and distribution fronts.

Unlike Canada, the US cannabis cultivation market is fragmented

“The market in the US is highly fragmented, characterized by a landscape with thousands of small producers,” explains Boyes. “This contrasts with Canada, which has a much more concentrated landscape with fewer but larger players.”

Boyes shares that the Arizona deal cost US$25mln, and was concluded at around 1.5 times revenue and 4 times cash flow, undeniably reasonable metrics for a business in the super-hot cannabis sector.

The Canadian Bioceutical Corporation gained more than just operating assets, as Boyes was eager to work with the executive who had built the Arizona business, Beth Stavola – so much so that Stavola is now president of the company’s US unit, CGX.

Purchasing the Arizona assets was an easy decision based on the results of extensive due diligence, which included an audit by a Canadian accounting firm and other assessments.

“The business checked every box,” says Boyes. “It was in a state where the regulatory authority is friendly. Also, when you obtain a license in Arizona you get seed-to-sale capability, with the right to operate a dispensary, to have one on-site cultivation, one off-site cultivation, run a full concentrates operation, and do your own packaging.”

Boyes explains that Arizona laws dictate medical cannabis operations must be owned by non-profit organizations, and therefore The Canadian Bioceutical Corporation does not cultivate or sell cannabis products itself in states with this type of legislation. Rather, the company purchased management, real estate leasing and other entities providing support to the licensed cultivation and retail operations under long-term services agreements. Because the owner of the license and facilities is a non-profit, the cash left over after operating costs flows to the service providers.

The company also holds another license that will enable it to open a third Arizona dispensary, which is currently in development. All three will operate under the Health for Life (H4L) banner and carry, among other products, the award-winning Multiple Extracts (MPX) brand Stavola established.

One final note on Arizona is that legalization for adult recreational use is off the table right now, following a November 2016 vote on Proposition 205, which proposed legalizing cannabis use for people 21 years of age and older. The “No” victory was far from overwhelming, with the vote decided by a margin of fewer than 3 percentage points.

After praising Arizona, the company is turning its focus to Massachusetts

The company’s second big acquisition of 2017 is taking place in a state where voting in November approved recreational use. In early April, The Canadian Bioceutical Corporation announced a Letter of Intent (LOI) to purchase a 51% stake in Massachusetts-based IMT LLC. The deal will take place via CGX using a services company structure similar to that employed in Arizona.

Assets include a 40,000 square foot facility zoned and licensed for cannabis cultivation and a license to open up to three medical cannabis dispensaries. Annual capacity is an impressive 2,500 kg of cannabis and 500,000 g of concentrates. The first dispensary, in the city of Fall River, will be adjacent to the cultivation facility.

The acquisition calls for a US$5.1mln cash payment to IMT LLC and a further US$2mln in capital to build the second and third dispensaries. Massachusetts could begin licensing dispensaries for recreational sales as early as January 2018, with preference given to medical-use locations already up and running.

In early May, The Canadian Bioceutical Corporation announced it is moving into a third market, as it is acquiring 100% of GreenMart of Nevada, a licensed cultivation and wholesaling business based in Las Vegas.

The growing facility is fully operational and can produce 1,600 kg of dried cannabis per year plus 85,000 g of concentrate. Total cost is US$19mln, payable half in units of the company and half as a non-interest bearing promissory note.

Boyes notes that while Nevada’s population is less than three million people, over 42 million tourists visit each year, so with voters having recently given the green light for recreational use the total market could be very large.

Completing over C$50mln in acquisitions during the first half of 2017 would be quite a feat, and a US$25mln line of credit the company secured in May will play an important role. It will also help to limit dilution; the company stated its intent in late March to raise US$20mln by issuing new shares but decided to raise less (the book was closed at US$11.2mln) because the line of credit can cover a substantial portion of near-term spending.

While Boyes says the Canadian cultivation license for its facility in Owen Sound, Ontario, is still something the company would like to obtain, the focus for now is definitely the US, where he says more acquisitions can be anticipated this year.

The company is undervalued relative to many other cannabis players in Canada

Boyes has been somewhat surprised that his company has not achieved the valuation multiples enjoyed by some other public cannabis issuers in Canada, but thinks this will correct itself over time as investors become more comfortable with businesses operating south of the border, where on a federal level the possession of cannabis remains illegal.

“There is a degree of concern about the political environment in the US, but the more you are involved down there the less you see it as a risk,” Boyes concludes. “Some states may need to tighten their regulations, but overall the industry is growing too quickly and simply creating too much employment and tax revenue. We may see some speed bumps along the way but, in my opinion, the US is a good place to be growing a business such as ours.”

This story was originally published at www.proactiveinvestors.com on May 8, 2017 and featured in The CSE Quarterly.

Learn more about Canadian Bioceutical Corporation at http://www.canadianbioceutical.com/ and on the CSE website at http://thecse.com/en/listings/diversified-industries/the-canadian-bioceutical-corporation.

CannaRoyalty charting own course in North America’s cannabis marketplace

When the first companies focusing on cannabis opportunities started listing on the Canadian Securities Exchange a few years ago, the common model was to submit an application to Health Canada with an eye to producing for the domestic medical-use market.

Fast-forward to 2017 and regulatory change in Canada, plus some 29 US states and the District of Columbia, is creating new business opportunities in what is beginning to take on the guise of an international market.

For CannaRoyalty Corp. (CSE:CRZ), it’s 25 opportunities so far, or at least that is the number of holdings the company has acquired to date.

Run by founder and CEO Marc Lustig, former head of capital markets for investment banking powerhouse Dundee Securities, CannaRoyalty looks on both sides of the border for investment opportunities with the potential to contribute a dependable stream of cash flow.

Candidates are put through a strict due diligence process and those making the cut are offered capital under a set of terms tailored to fit their business, along with guidance from CannaRoyalty that has proven valuable in helping investee companies deploy that capital to boost growth.

“There is no cookie-cutter framework we use as a threshold for all asset types,” says Lustig. “We are primarily seeking exposure to obtain royalties, which means that when we invest we are getting a part of the business in the future in the form of a percentage of revenue or a percentage of net income.”

A quick perusal of the CannaRoyalty portfolio shows that royalty agreements often come alongside equity stakes in a business, which enables CannaRoyalty to be more hands-on than would be the case if it were merely receiving a percentage of revenue.

One of the company’s earliest investments was in Toronto-based Resolve Digital Health, in which CannaRoyalty participated as a seed investor. “With minority positions such as Resolve, we of course want a good return, but the bigger priority is the strategic side,” says Lustig. “Resolve is producing a revolutionary technology called the Breeze platform which we aim to license from them. It’s great that Resolve is worth eight-times more than where we invested, but the strategic upside is equally important.”

Resolve’s Breeze vaporizer provides users with a metered dosage of cannabis using a sealed pod that is inserted into the device. Usage can be monitored through an app that works via bluetooth on smartphones, thus providing accurate information for the patient and supporting health care professionals.

Another example of a minority holding is Vancouver-based Anandia Laboratories, in which CannaRoyalty holds a 20% equity stake. “Anandia is definitely one of our most exciting holdings,” says Lustig. “It is a leader in testing and genetics of cannabis and a good example of our interest in ancillary businesses that are integral to the execution of a federal recreational policy in Canada.”

Lustig refers to the Anandia investment as the “picks and shovels model,” whereby rather than investing in producers themselves, CannaRoyalty favours businesses that make products cultivators need to grow cannabis effectively – moving up the value chain as compared to cultivators whose product is at risk of becoming a commodity.

At the other end of the ownership percentage spectrum, CannaRoyalty owns 100% of DreamCatcher Labs, which Lustig describes as one of the largest companies designing vaporization pens and cartridges. Hardware designed and manufactured by DreamCatcher is sold to other companies on a private label basis, with one model in particular also used for CannaRoyalty’s own GreenRock Botanicals brand.

Lustig’s personal interest in the cannabis industry developed through his work at Dundee, and he had an edge in understanding the potential of the fast-changing sector thanks to his molecular biology degree and start in the pharmaceutical industry, prior to moving into capital markets for his career.

In 2014, when Canada allowed companies to set themselves up as entities producing commercially for the medical-use market, the overnight change in investor sentiment opened the banker’s eyes to a new opportunity.

“If you were in one of the investment firms in Canada you could not help but do financings for new cannabis companies and that was my education in terms of the capital markets opportunity – there was endless capital that wanted to be invested in this new and exciting area. But it was also an opportunity for me to learn about cannabis the plant and cannabis the market.”

Lustig believes sales of cannabis and related products could one day outstrip those of alcohol and tobacco, seeing as the plant has both recreational and medicinal uses. “Because of the legal environment, cannabis has never had the chance to benefit from large research budgets to determine the full extent of its medical properties,” says Lustig. “When you consider all the therapeutic uses it could have, that is where the unlimited upside comes from – the idea that cannabis can be officially recognized as a medical product as well.”

Despite that growth, being in the right product at the right time will remain important, and Lustig holds strong views on how the cannabis marketplace is likely to evolve. “We will continue to grow our company on the principle that we are a lot more excited by non-smoking methods of ingesting cannabis, such as transdermal patches, edibles, vape cartridges and capsules. That, to me, is where the high growth in the market is. I think you will see that side of the market get to 75-80% versus the ingestion of cannabis by smoking.”

As for CannaRoyalty in the near term, Lustig says investors can anticipate more deals bringing cash flow and strategic synergies, some in markets where CannaRoyalty does not currently have a presence. Jurisdictions in which the company already has portfolio holdings include Canada, Washington, Oregon, California, Arizona and Puerto Rico.

Before long, all of this is expected to culminate in an attractive bottom line. “Investors should view our portfolio as a diverse mix of income and asset growth in the cannabis market,” Lustig concludes.

“With our cannabis know-how and management expertise we are building a platform of assets designed to accelerate early strength in high-value segments of the cannabis market. This strategy sets us apart from other cannabis companies and will drive asset growth and shareholder value.”

This story was originally published at www.proactiveinvestors.com on May 2, 2017 and featured in The CSE Quarterly.

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Learn more about CannaRoyalty at http://cannaroyalty.com/ and on the CSE website at http://thecse.com/en/listings/diversified-industries/cannaroyalty-corp.

Cannabis-themed Special Edition of the CSE Quarterly now live!

There’s no denying that since 2014 the cannabis industry has increasingly grown a following with investors and, of late, mainstream media and conservative business service providers.

In this special edition of the CSE Quarterly, six CSE-listed companies operating in the rapidly evolving cannabis space are profiled.  These firms, and the entrepreneurs behind them, showcase the diversity of opportunities and challenges facing an industry that is still in its earliest stages.

Featured in this special edition of the CSE Quarterly are:

  • Alternate Health Corp. (CSE:AHG)
  • CannaRoyalty Corp. (CSE:CRZ)
  • iAnthus Capital Holdings Inc. (CSE:IAN)
  • Maricann Group Inc. (CSE:MARI)
  • Namaste Technologies Inc. (CSE:N)
  • The Canadian Bioceutical Corporation (CSE:BCC)

Read the latest issue of the CSE Quarterly below.


Missed a previous edition of the CSE Quarterly? Click here to access previous issues.

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Versus Systems prepares to play matchmaker between major brands, video gamers worldwide

The precise number depends on the source you choose, but multiple surveys indicate that people spend hundreds of millions of hours playing video games every week. And that’s just in North America.

Considered another way, the Super Bowl and its famously expensive commercials attract around 110 million viewers in the United States, yet that occurs just once a year.

Clearly, then, video games are media – and immersive media at that – with millions of people engaged at any given moment. And most players pack enough disposable income that brands want very much to reach them.

The billion-dollar question is how to introduce a level of commercial marketing into the gaming environment such that it makes a positive impression on behalf of a brand, as the last thing you’d want to do is turn gamers off by being intrusive or annoying.

Versus Systems (CSE:VS) is confident it has the answer, and it revolves around encouraging both avid and casual gamers to opt into an environment where products and brands are featured in a way such that players become eager to interact.

Gamers are naturally competitive, so the idea of offering the chance to play for more than just an ephemeral digital points total makes sense. Playing for valuable prizes introduces a new degree of meaning to the activity, and it is this dynamic that is enabling Versus Systems to draw interest from an increasing number of brands searching for new ways to market their products.

“We’ve created a platform that does two things,” explains Versus Systems CEO Matthew Pierce. “First, it allows publishers and developers to offer prizes within their games to drive engagement. It makes them more fun to play and the idea that you can compete for everything from downloadable content to physical goods to energy drinks and concert tickets is an enormously powerful opportunity.

“The second thing it does is allow brands to be part of a promotions engine for in-game advertising and connect those brands to players and spectators. Our belief is that if you make it fun to try to win prizes and make it aspirational, and you find products that players actually want to play for, that is a really rich opportunity.”

The origin of Versus Systems is a fascinating story and helps explain not only where the core idea came from, but why the company is positioned to succeed in a business with immense challenges, both technical and legal.

Pierce is a Stanford graduate who started his own companies and worked for large consulting groups. Versus Systems was founded in a technology incubator Pierce worked in, but it was an incubator with a twist. Not only was it full of programmers and engineers with incredible skills and entrepreneurial zeal, but its main backer was a law firm, and this is the team’s secret sauce, if you will.

“The thesis was to work in areas that took advantage of the partners’ strengths,” says Pierce. “We thus wanted ideas that were technically complex, and we also needed the regulatory landscape to be complicated because we had access to tremendous attorneys. We are versed in the entertainment space and thus wanted to keep things in that sector. The first company we incubated was Versus and it is the best project I have ever worked on.”

Players who want to compete on the Versus platform must first download an app to their phone or computer so they can log into the community. Once in, a player finds that the Versus experience is additive and does not interfere with their fun by adding the conventional overlay of monetization approaches common to many games these days. Rather, Versus enables players to determine the parameters of interaction themselves.

“You log into your game and a new set of menus appears when you go to play,” explains Pierce. “Players can choose to play for money, for physical goods, or for downloadable goods. You can also decide if you want to play one on one, or perhaps one on five where the top three players win a prize. And gamers often like to play people they have invited because it means something if they can beat them.”

The beauty of the business model from the Versus Systems perspective is that the company does not have to make large financial outlays in order to attract users to its platform. As it aligns with popular games, players will naturally find Versus and its competitive options on their own.

For game developers, the appeal is a platform that is a total solution, managing prize and competition details for players, while also addressing administrative challenges they surely would rather have someone else take care of.

“The concept of creating a platform that solves a lot of the legal and regulatory burdens faced by game developers and publishers was an important part of the genesis of the company,” says Pierce. “We call the approach dynamic regulatory compliance, as we make sure that prizes are only available in regions and countries where those prizes are legal. It is a new approach and we have been writing patents to protect the intellectual property since 2014.”

Versus generates a number of revenue streams from its involvement with each game, the most important being revenue-sharing agreements with developers and publishers when brands pay to offer products or gamers choose a pay-to-play option from the platform. Integration fees help the company cover up-front costs.

“It has to be bespoke integration,” says Pierce. “Nobody knows the players better than the developer and we don’t want to take them out of that world. I don’t want this to be something that in any way detracts from the gaming experience, but rather helps to make it more engaging.”

Pierce and his team are currently working to integrate the beta model of the platform into a handful of games, while at the same time adding prize providers and signing up brands, some of which he expects to be very big names. Rapid expansion of the company and its reach is expected to follow.

“The games we are working with early on are really great,” says Pierce. “When we get out into the market and people see how exciting this is as an engagement engine, I think we’ll soon have to scale up to put this in more and bigger titles. All brands want to be where their customers are, and their customers are playing games.”

This story was originally published at www.proactiveinvestors.com on Mar 1, 2017 and featured in The CSE Quarterly.

Learn more about Versus Systems at http://www.versussystems.com/ and on the CSE website at http://thecse.com/en/listings/technology/versus-systems-inc.

Marapharm Ventures diversifies across products, jurisdictions to find medical cannabis sweet spot

Getting in on the ground floor of an exciting new opportunity is one well-acknowledged path to success. Marapharm Ventures (CSE:MDM) CEO Linda Sampson likens it to finding a “once in a lifetime opportunity” and believes that is exactly what her company is moving forward with as it draws closer to operations at multiple facilities focusing on the medical cannabis industry.

Marapharm is taking a different approach than many of the other companies in the space, diversifying its portfolio across geographic regions and business types, and doing so in a way that marries its corporate strengths with the needs of different markets. It is a plan that at once helps manage risk while increasing the degree of success Marapharm and its shareholders can potentially realize.

Marapharm is advancing cannabis production opportunities in British Columbia and Nevada, and will also serve as landlord of a large facility in Washington State. It plans to not only grow cannabis but also process harvested material into products such as oils and edibles in jurisdictions where this is permitted. Production, processing, landowner, future retailer – put a check mark in the vertical integration box.

Fortunately, when it comes time to ship product, Marapharm’s boss is an experienced marketer. Sampson, originally from South Africa, enjoyed a career before agreeing to head Marapharm that saw her re-brand struggling companies and help turn their operations successful in relatively short order. Sampson also worked with commercial property developers to conceptualize projects, consult with designers to ensure details were right, and market them afterward.

Sampson’s skillset is being put to good use at Marapharm, which leans on her for real estate, market research, and strategic planning insight to name just a few challenging aspects of the fast-moving, big money industry that is medical cannabis in North America.

Marapharm has an application before Health Canada for a production facility in the picturesque city of Kelowna – also home to Marapharm’s head office – that has passed the Security Clearance phase and is now in the in-depth Review phase.

But moving faster thanks to different local rules are facilities in the US state of Nevada. Here, Marapharm is looking to be a major player in the Las Vegas market for medical, and soon recreational, cannabis and processed cannabis products.

“Marapharm owns a company called EcoNevada which holds a 204,000 square foot cultivation license and a 16,000 square foot processing license,” explains Sampson. “And at another Nevada project we own the land with no debt, have an option to purchase 85% of the production license for $250,000, and then can acquire the remaining 15% for $1,000,000. When you consider the three licenses together it totals about 304,000 square feet, which is the equivalent of six and a quarter football fields.”

The holder of the latter license is businessman Kurt Keating, an award winning organic cannabis grower who will work with Marapharm on its Nevada projects as general manager.

But Keating’s role does not end there. Being a Washington resident, Keating obtained a license in that state and will use it to operate a facility that would be situated on 13 acres of land Marapharm has the option to purchase. It already accommodates a 28,000 square foot building used as a cultivation facility and the plan is to expand that footprint.

Companies from outside of Washington State are not permitted to hold local growing licenses, and with Marapharm hailing from Canada that means it can’t be the licensed grower at the Washington site. The strategy is thus to purchase the land, build and outfit the facility, then lease it to Keating and other growers for their own production use. A departure compared to being the actual grower, but still a use of capital that generates a good return and diversifies both the company’s asset holdings and revenue model.

“Part of Kurt’s Washington license allows for unlimited processing,” says Sampson. “There is a building next to the production facility that we can turn into a processing center. We can equip it so as to maximize processing potential to be operated as a turnkey facility. For people who hold cultivation licenses but not processing licenses, we can allow cultivation on our property and then they can use the processing facility after harvests.”

Sampson says Nevada will be the company’s biggest cultivation center, as well as the one that receives the majority of the marketing budget. “The Nevada medical market is unusual in that it is a reciprocal state – if you are a medical cannabis user from another jurisdiction you can bring your card to Nevada and they will honor it,” explains Sampson. “Las Vegas gets 50 million visitors a year, and on November 9 the state voted to move forward with legalization, so that adds another aspect to the value of what we have there. I think our involvement in Nevada represents a giant step forward for our company.”

Looking out over the next 12 months, Marapharm intends to forge ahead with its application in Canada while completing the build-out at its Washington site.

In Nevada, the company wants to get production up and running sooner and use its processing facility to create edibles and other products suited to the local market. “We anticipate that the Nevada market will be more focused on processed products as opposed to the actual cannabis, as they can be used more discreetly,” says Sampson.

Reflecting the different regulatory atmosphere, the Nevada sites actually face April deadlines to begin operating, so Marapharm is working to have initial 5,000 square foot facilities functional on each within the prescribed time frame. “They are OK with us having a smaller building but with the intent to move ahead with a bigger structure at a later date,” Sampson says.

So, big plans and tight timelines, but how is Marapharm set to manage financially? To begin with, the Nevada land is paid for and the company does not have any debt, plus warrant exercises brought in over $1.5 million as the stock price topped the $2.00 level in November. The stock trades good volume between $1.00 and $2.00, which suggests the company has financing options that would not require it to accept undue dilution if it needed to go to market.

Marapharm also has designs on California, not to mention automated vending machines, that, using proprietary biometrics for identification purposes, would be used where regulations allow. It is a strategy of diversification, integration, but focus on a young, growing cannabis industry – the pieces appear to fit.

“It is not often a chance like this comes along – it is kind of like the gold rush,” Sampson concludes. “We just feel so honored at the opportunity to be in on the ground floor and be working in good jurisdictions with great people. I think the future looks very bright.”

This story was originally published at www.proactiveinvestors.com on Feb 23, 2017 and featured in The CSE Quarterly.

Learn more about Marapharm Ventures at http://www.marapharm.com/ and on the CSE website at http://thecse.com/en/listings/life-sciences/marapharm-ventures-inc.

Oriental Non-Ferrous Resources Development sees Mongolia as cornerstone of Asian mining strategy

Covering an area larger than Peru yet with a population of just 3 million people, Mongolia is the most sparsely populated country on earth.  It is also a beautiful and fascinating nation, with traditions established before Genghis Khan founded the Mongol Empire in 1206 influencing lifestyles to this day.

While mindful of its rich culture, Mongolia is easing into the modern economy with commercial-scale mining leading the way.  How could it not when minerals comprise some 80% of the country’s exports?

Mongolia’s most famous mine is undeniably Oyu Tolgoi, the copper-gold behemoth operated jointly with the Mongolian government by Rio Tinto (LON:RIO) subsidiary Turquoise Hill Mining since 2013.

But the country is home to other mines as well, such as Centerra Gold (TSX:CG)’s Boroo mine, a historic gold mine whose modern-day output began in March 2004 and continued until September 2012, though with a stoppage of just over a year beginning in November 2010.

Oriental Non-Ferrous Resources Development (CSE:URG) and its leadership team were attracted to the country for the same reasons as other companies – high-quality projects, proximity to Asia and a favourable permitting environment, to name a few.

The driving force behind the company’s strategy and operations, founder and director Youliang Wang, explains that the concept for Oriental Non-Ferrous Resources Development dates back some 20 years to when he was a banker at China Construction Bank, where his responsibilities included overseeing loans to Chinese mining companies.

Attracted by the scale and variety of opportunity in Mongolia, Wang first invested in a dairy business, eventually broadening into other agricultural businesses as complements.

Given his background in mining finance, though, it was only a matter of time until he created a plan to move into this sector.  In 2013, Wang and his team immersed themselves in the Mongolian mining community, working with consultants and local exploration teams to examine various properties.  The result was the company’s current land package, prospective for both industrial and precious metals.

Oriental Non-Ferrous Resources Development’s properties are located in the Bornuur district in the Tӧv Aimag, or Central Province, of Northern Mongolia.  Its package spans roughly 1,050 hectares, comprised mostly of the Kharganii am-1 Molybdenum Property.

“Our licensed area is situated in the North Khentii tectonic belt and we have encountered gold, copper, molybdenum, tungsten and silver on its grounds,” says Wang.  “The projects are located 24km northwest of Centerra Gold’s Boroo deposit and 15km east of their Gatsuurt gold deposit.”

Since acquiring the Mongolian projects, the company has completed extensive trenching and geophysical work, geological mapping, ground magnetic surveys and polarization gradient surveys.

“Our initial phase of exploration drill work has contributed to a database that contains approximately 3,501 drill core samples and 29 trench samples that were assayed for molybdenum,” says Wang. “This includes a current program which encompasses 29 holes for a total of over 11,630m.”

Wang explains that many of the holes have multiple intersections of molybdenum mineralization above 0.05%, with several intervals of between 1m and 2m exceeding 0.5% Mo. The best hole yielded a 3m length averaging 2.413% Mo.

Wang notes that the Mongolian permitting environment is very reasonable, with the various licenses Oriental Non-Ferrous Resources Development holds typically being extendable for up to 30 years.

P&E Mining Consultants of Toronto was recently chosen to complete a NI 43-101 report for the company’s Kharganii am-1 Project, which will reflect results from the current drill program and associated metallurgical test work.  A concurrent evaluation of the preliminary economics of the molybdenum deposit is also planned.

The properties being situated within a recognized gold belt, Oriental Non-Ferrous Resources Development is also gearing up to initiate a property-wide evaluation of potential gold targets.  The work will include mapping, prospecting and IP geophysics.  Expansion of the property is also under consideration.

“The North Khentii gold belt has an extensive history of mining both alluvial placer and bedrock gold deposits,” says Wang.  “After discussions with geologists from P&E, we are looking to evaluate high-potential targets within the property for gold mineralization.”

Wang says Oriental Non-Ferrous Resources Development is also evaluating both merger and acquisition opportunities and possible project procurements, the longer-term objective being to develop a portfolio of Asia-based projects diversified across various mineral types and regions.

Time will tell where these expansion efforts lead, but for the time being there is plenty to be excited about in Mongolia.  The country has only been an internationally accessible mining jurisdiction since the mid-1990s, and if one considers what the industry has been able to accomplish in the last decade between new discoveries and active operators, Mongolia holds its own vis-à-vis many more mature mining jurisdictions in other parts of the world.

“We have long believed in the viability of mining projects in Mongolia, and when the projects in our current portfolio came to our attention, we thought what better way to get involved in the space than to make investments in some of these great projects, and then look to take them public,” Wang concludes.  “Mongolia has a rich mining tradition, and we hope Oriental Non-Ferrous Resources Development will in time be able to play a lasting role.”

This story was originally published at www.proactiveinvestors.com on Feb 28, 2017 and featured in The CSE Quarterly.

Learn more about Oriental Non-Ferrous Resources Development on the CSE website at http://thecse.com/en/listings/mining/oriental-non-ferrous-resources-development-incc.

West Red Lake Gold Mines going for gold in legendary Canadian district

Anyone who knows anything about Canadian gold mining will be familiar with the legendary Red Lake Gold District in Ontario.

It’s home to the Red Lake mine, one of the world’s most prolific mines owned by one of the biggest producers of the yellow metal: Goldcorp (TSX:G).

The district has produced over 30 million ounces of high-grade gold, and other major operations in the area include the Madsen and Starrett Olsen mines, owned by Pure Gold Mining (CVE:PGM), and Goldcorp’s Red Lake, Campbell, and Cochenour mines.

Well on the way to making its own mark in the district is junior explorer West Red Lake Gold Mines (CSE:RLG).

The company’s 3,100 hectare property hosts three former producing mines, lies just 20km from Goldcorp’s Red Lake mine and boasts a management team that is expert in bringing gold projects to the point where they are bought out by bigger producers.

“We explore and develop gold projects – outline a gold deposit or what could be an underground mine in the case of our present project,” explains president John Kontak.

“We would, say, take a company of $20 million market cap and develop the project for a transaction that could be worth a couple of hundred million dollars. That’s what we’ve done before and that’s what we’re working towards now,” he said, adding that it’s a two- to three-year strategy.

And this team certainly has form.

Entrepreneur Tom Meredith is Executive Chairman. He was formerly head of VG Gold, where he worked with West Red Lake’s exploration manager, Ken Guy, and took a $3 million market cap firm to the point where it was sold to Goldcorp founder Rob McEwen in a transaction valued at approximately $200 million.

Meanwhile, Kontak was formerly president of Victory Gold Mines, where Meredith and Guy were also involved. It owned a former open pit east of Timmins that was later sold and is now part of Osisko Mining (TSX:OSK).

The team (including Meredith, Guy and Kontak) took on West Red Lake in 2014 during the gold bear market, sorted out some legacy issues, and in February of 2016 filed a NI 43-101 inferred resource estimate for the Rowan mine target of 1.087 million ounces at 7.57 grams per tonne (g/t) gold.

West Red Lake has three former mines on the property – the Rowan, Red Summit and Mount Jamie mines. The latter two are owned 100% by the company, while Rowan is 40% owned by joint venture and funding partner Goldcorp.

Rowan is currently the focus of attention, where the company is operator and over 500 holes have been drilled to produce that NI 43-101 estimate.

The Rowan project consists of two main exploration targets. At the former mine, the goal is to significantly increase the resource to allow for a long mine life.

Then there’s blue-sky potential at another target, a structural intersection where two regional gold-bearing structures meet.

“That’s what happened to Goldcorp,” exclaims Kontak. “It found a zone and that took it from a junior to a multi-billion dollar company.”

It’s worth noting here that Goldcorp’s Red Lake mine produced a whopping 375,700 ounces of the precious metal in 2015 alone.

The geology of the Rowan mine is a fairly simple archean greenstone, Kontak explains, whereas the intersection target is more complicated, involving folding rocks.

However technological advancements in exploration nowadays means finding that “needle in the haystack” is increasingly plausible.

West Red Lake started drilling again at Rowan in January, having completed two programs last year, and plans to start a campaign every quarter while releasing assays from the preceding program.

The near-term aim is to expand the existing resource and in the future to upgrade into the higher-confidence “indicated” category.

The resource is open at depth and to the east and west, and there’s a 12km strike length so there is plenty of opportunity to work at increasing it, though there’s no specific time set for the release of the next estimate.

“This could be turned into an operating underground gold mine,” Kontak said of Rowan, pointing out there were many mills with spare capacity around in the area, along with good infrastructure and water.

The Red Lake region’s propensity to yield high-grade gold is also key to the story.

The 1.087 million ounces of inferred resource at 7.57 g/t was at a 3 g/t cut-off, and at a higher 5 g/t cut-off there were still 850,000 gold ounces inferred from just 2.5 million tonnes. The basic message is the higher the grade, the lower the costs.

Kontak explains: “You have to dig less rock out of the ground, you have to transport less rock to the mill and you have to crush less rock at the mill to get the gold.”

West Red Lake has a team in Toronto already trying to attract potential production companies who may be interested in buying the project in two to three years.

Financially, the company has around $1.5 million in the treasury, and is funded for its drill programs in the first and second quarters.

Management are significant shareholders, so they are obviously keen to see value enhanced.

With some attractive targets and apparent multi-million ounce potential, West Red Lake Gold Mines has it all to play for at a time of rising sentiment in the gold market.

This story was originally published at www.proactiveinvestors.com on Feb 14, 2017 and featured in The CSE Quarterly.

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Learn more about West Red Lake Gold Mines at http://www.westredlakegold.com/ and on the CSE website at http://thecse.com/en/listings/mining/west-red-lake-gold-mines-inc.

High grade, low cost and near production: Winston Gold is ready to shine

Throw in an experienced management team and you’ve got what many would see as the complete package.

With its two assets and strong mining team, Winston Gold Mining, which raised C$545,000 when it listed on the CSE last March, appears to tick all of these boxes.

While it is still in the early stages of developing its Gold Ridge property in Arizona and its namesake Winston project in Montana, the company holds historic data (particularly on the latter) which suggests both projects have more than a fighting chance of success.

Winston is located near Helena, Montana – an area with a rich mining history dating back to the 19th century.

The district is reported to have produced 100,000 ounces of gold from only 150,000 tonnes of ore back in its heyday at an impressive average grade of 22.8 grams per tonne (g/t). A quick look at the records will tell you that the Custer mine – which lies within the Winston property – was a major contributor to that figure.

Similarly, the Gold Ridge project near Willcox in Arizona yielded some good grades in the past, too.

“It was acquired from some people we know very well. It’s also a historic mine, but not quite as prolific as the Winston claims,” explains the company’s chief executive Murray Nye.

The Gold Prince deposit on the project was mined sporadically between 1932 and 1996 and produced 22,000 ounces of the precious metal from multiple veins, averaging almost 12 g/t.

The low price of gold back in the eighties forced the previous owners to move out of the property, but Nye’s interest was piqued by what was left behind.

“What we liked about that was that it had a lot of development done already. They had set up two drill stations underground and we went down and checked it out and they were both in good shape,” he explains.

“Both the drill stations were ready to go and drill below the level they were mining, so we thought there was a pretty good opportunity to start some bulk sampling or test-mining there on a near-term basis.”

This is exactly what Nye and his team look for when assessing potential projects.

“We’re after properties that we believe can get to a development or bulk sampling stage as quickly as possible because the investors who we’ve aligned ourselves with are looking for that kind of opportunity and we think we’ve found a couple of assets that fit those criteria.”

Given that it only acquired Gold Ridge at the back end of last year, not much additional work has been carried out at the property. The company’s primary focus has been on its flagship Winston property.

“We think it has more opportunities in terms of tonnage,” says Nye.

The project had around 630 holes drilled down to around 100 metres or so as the previous owners tried to assess the potential for an open pit operation. They estimated it could be host to around 500,000 ounces of gold, potentially more.

“That’s not 43-101 compliant but it certainly gives us an indication that there are some pretty good gold values in the property and many of them were very high grade,” says Nye.

The CEO and his partner Mike Gunsinger think the real potential of the Winston project lies in the untested geology further below ground.

“Our thinking is – and three geologists have also told me this – that this project is better suited to underground mining. What we’re doing now is drilling underneath where the old workings are.”

Recent results would seem to back up this theory. In January Winston appeared to locate a “high-grade gold vein which could be amenable to underground test-mining.”

Drilling along the Edna-West vein, as it has now been called, yielded grades of 8 g/t up to 44 g/t.

The bonus of these high grades is that it would make the project relatively low-cost.

But it’s not just the grades that make Winston such an exciting project; the fact that the infrastructure is already in place is also a plus-point.

“There’s a major highway within a half-mile of the property and there’s a major power line running right through the middle of it,” says Nye.

“The elevation is also low by Montana standards so Winston would lend itself to year-round operations.”

The plan is to carry on drilling here for another few months and then go underground, with a view to getting into production within two years.

“If we were to start something [underground] eight months from now, you’d be doing the development which would probably take another eight months,” explains Nye.

“Depending on how long the vein is and what you’re mining it would at least take you another eight months to develop that into a shrinkage stope operation.

“So within a couple of years – maybe a year and a half – you’d be in a production scenario if everything went to plan.”

“Our goal is to develop underground access and gradually ramp up to a 300 tonne per day test-mining stage. If all goes according to plan we believe we could achieve this for about CDN $10 million.  Of course the ultimate number of ounces produced will depend on the average grade recovered.”

That’s not a lot in mining terms, but it is a tough ask for a fledgling business. But that there is where the experience and connections come in.

Winston is the second mining company Nye has headed over the past decade, and before that he was involved in financing projects, while Gunsinger has over 50 years of mining experience to draw upon.

So they know mining money people and are also pretty well up on the laws and regulations, especially in Montana.

“Operationally we’ve got a very experienced mining team and management is key in this. We’re very familiar with the state, the regulations there and we have very good relations with regulatory bodies,” says Nye.

The one thing Nye can’t control is the price of gold, although things are starting to look up here too.

“The gold market, in my opinion, is a place to have a serious look right now – it bottomed out but now seems to be back on an uptick,” the Winston CEO says.

Is this another box ticked for Winston Gold Mining? Very possibly.

This story was originally published at www.proactiveinvestors.com on Feb 16, 2017 and featured in The CSE Quarterly.

Learn more about Winston Gold Mining at http://winstongoldmining.com/ and on the CSE website at http://thecse.com/en/listings/mining/winston-gold-mining-corp.