Elixinol Global Share Price Down after Land Purchase Announcement
At time of writing, Elixinol Global Limited [ASX:EXL] is down 2.43%, trading at $3.21.
It has been a successful year for Elixinol Global with the stock returning 133%:
The latest news out of the company is that it has purchased new land for its proposed manufacturing facility and renamed its Australian medical cannabis company.
New land, new name for Elixinol’s Australian cannabis operation
As per this morning’s announcement, the land purchased is a ‘unique’ 60 acre lot. Located in the Northern Rivers District of NSW, the planned facility will cover around 5000 square metres on a secured 4.9 acre block within the 60 acre property.
With such a large land purchase, the company now has significant room to expand should the medical cannabis industry take off in Australia.
It is crucial to note however, that the company has yet to receive a manufacturing licence from the Office of Drug Control (ODC), or a local council Development Application approval.
However Elixinol Global’s board thinks that, ‘it is commercially prudent to waive the conditions and to secure this unique asset through its outright purchase.’
This is because, ‘based on the Company’s discussions with the ODC, the Board has no reason to believe that licence approval will not be granted.’
Basically they are banking on getting the licenses and approvals they need, so they are ready to go as soon as the license and approval come in.
Today, the stock may be down due to market jitters in the US, a source of much of its revenue.
Managing Director Linda McLeod, noted that,
‘Although it is disappointing to have not received the licences from the ODC as yet, it is in no way reflective of the quality and robustness of our submissions. We understand that the department is under-resourced and has been unable to assess applications within the time-frame originally suggested. We have not been informed of any reason why our applications would be denied.’
The proposed medical cannabis manufacturing operation has been renamed to Nunyara Pharma Pty Ltd. Nunyara is an Indigenous word for ‘to be made well again.’
What are Elixinol’s prospects going forward?
Elixinol Global has been the star amongst Aussie ‘pot stocks’ for a number of reasons.
For starters, the company has been expanding rapidly, with operations in the US driving their strong cash balance through sales of hemp based products such as snack bars, dietary supplements and skin care products.
Their most recent figures state their cash balance stands at $42.9 million.
Source: Elixinol Global
So with strong cash flow comes the potential for further expansion.
They also have a diverse product range which appeals to a variety of customers — they even have CBD dog treats.
Going forward, the company is confident (as the land purchase indicates) of securing an ODC manufacturing license, which would allow it to properly launch its Australian business.
It has also recently expanded into New Zealand and European market.
For the moment, Elixinol’s rise looks hard to stop.
For Money Morning