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All figures in USD unless stated otherwise
Halo Labs Inc. (“Halo” or the “Company“) is pleased to provide an update in respect of recent developments for Bophelo Bioscience & Wellness (Pty) Ltd. (“Bophelo“) in Lesotho, an indirect wholly-owned subsidiary of Halo. Bophelo intends to operate one of the largest-cannabis cultivation sites in the world, and is expected to cultivate and distribute high-quality cannabis, derived from exclusive, proprietary genetics under license from OG DNA Genetics (“DNA“). The Company is also pursuing a similar license arrangement with Terphogz, cultivator of the Zkittlez cannabis strains. As previously announced, Bophelo has entered into an offtake agreement with Medcan Ltd. (“Medcan“), located in Malta, that it intends to leverage upon the receipt of a Good Agricultural and Collection Practices (“GACP“) certification.
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Bophelo Satellite Overview (Photo: Business Wire)
The Company is pleased to announce that Andreas Met, Chief Operating Officer and Co-Founder of Halo, will be leading Halo’s international business operations, and is planning to relocate to Lesotho by the end of 2020. Mr. Met will be tasked with three priorities:
Expanding Bophelo’s operation to deliver the highest-quality product at scale.
Establishing Halo’s international distribution base, first in Malta in partnership with Medcan.
Selling to a broad base of potential countries in the EU, including the UK.
Mr. Met stated, “I’m thrilled to have the opportunity to develop what is expected to be one of the world’s largest grow operations. When we launched our six-acre East Evans Creek grow in Oregon four years ago, that was one of the largest grow sites in Oregon. Bophelo’s nine year license allows it to cultivate, manufacture, import and export cannabis products. The opportunity to oversee a cultivation site that is up to eighty-two times larger at 494 acres (200 hectares) is the opportunity of a lifetime.”
Mr. Met’s background is well-suited to execute Halo’s international expansion. Mr. Met conducted the first medical grow on a quarter acre at the Company’s East Evans Creek site in 2016. The following year, he oversaw the expansion of East Evans Creek to six acres. At the same time, Mr. Met led the development of all manufacturing and sales activities from the ground up in Oregon. As Mr. Met stated, “I’ve led the Company in several rapid start-up expansions. Bophelo is no different. We have a solid base, excellent support, and a good management team that we have built up over the past two years.” Prior to entering the cannabis industry, Mr. Met worked as a Senior Merchant at Walmart, leading a buying desk with $5B in sales. Mr. Met has extensive experience in the consumer packaged goods industry, having worked at Nabisco, Conagra, Rain Bird and Targus.
Bophelo’s operating site occupies an ideal location, with ample labor, abundant free water, flat land, good soil and low electricity costs. The favorable high-altitude and low-humidity climate provide clean growing conditions in this mountainous region. With over 200 days of annual sunshine, Bophelo can support as many as three full growing and harvest seasons a year.
Mr. Met continued, “Now that travel restrictions are being lifted in Lesotho and South Africa on October 1st, I feel confident in our ability to expand significantly, as we have already cultivated and tested high-quality flower at Bophelo.”
Halo is currently working on the final steps to receive full GACP certification for the Bophelo operations, including completing sanitization facilities, implementing security infrastructure, and building out the drying, trimming, and storage facilities. Once these projects are completed, Halo expects to receive GACP certification of the project in the fourth quarter of 2020. Rod Teague, Bophelo General Manager, remarked, “We’ve come a long way towards reaching this important milestone. It’s amazing what the team has accomplished here in Lesotho. I’m very much looking forward to exporting our first cannabis to Europe following the receipt of our GACP certification.”
Kiran Sidhu, CEO and Founder of Halo, affirms the timeliness of the international expansion: “With CAD$14 million in available funds under our loan agreement and our at-the-market equity program in place, we are now in a good financial position to build out Bophelo, leveraging our California and Oregon relationships with world class cannabis breeders to expand this international business.”
The January 2020 strategic alliance and seed purchase agreement with DNA, that gives Bophelo exclusive rights to develop new and existing DNA strains of medical cannabis in Lesotho, further ensures the quality and legitimacy of Bophelo’s products. DNA’s cannabis strains already command premium market prices in Canada, the United States and Europe, and are some of the most sought-after cannabis strains and seeds in the world.
Halo is currently in discussions with licensed cannabis cultivators located in Canada, Australia and Israel, regarding potential partnerships and commercial arrangements (including cost and revenue-sharing), that would include financing the build-out of the initial planned 25 acres (10 hectares) at the Bophelo site. Bophelo’s management is also in ongoing discussions with regional banks and private equity firms regarding potential funding for future expansion at Bophelo. With Covid-19 restrictions in the region beginning to ease, Halo believes that the discussions with banks and regional private equity firms will progress at a quicker pace, and could provide Bophelo with more financing options to consider.
Once built out, the initial 25 acres (10 hectares) could generate up to $187 million of revenue annually, assuming a yield of 3,300 pounds per acre (7.5 metric tons per hectare); an average sale price of $2,500 per kilogram over two harvest per year; and assuming the international export market expands significantly over the next two to five years. This full build-out is expected to cost $13,000,000. Bophelo’s current off take with MedCan is currently fixed at sale price of $3,000 per kilogram.
About Halo Labs
Halo is a leading, vertically integrated cannabis company that cultivates, extracts, manufactures and distributes quality cannabis flower, oils, and concentrates, and has sold approximately six million grams of oils and concentrates since inception. Halo continues to scale efficiently, partnering with trustworthy leaders in the industry, who value their operational expertise in bringing top-tier products to market. Current growth plans include expansion in key markets in the United States and Africa, with planned geographic expansion into U.K. and Canadian markets. With a consumer-centric focus, Halo markets value-driven, branded, and private-label products across multiple product categories.
Halo is led by a strong, diverse and innovative management team, with deep industry knowledge and blue-chip experience. The Company is currently operating in the United States in California, Oregon, and Nevada. Internationally, the Company is currently cultivating cannabis at Bophelo in Lesotho.
For further information regarding Halo, see Halo’s disclosure documents on SEDAR at www.sedar.com
About Bophelo Bioscience & Wellness (Pty) Ltd.
Bophelo is based in the Kingdom of Lesotho, Southern Africa and is the holder of one of a limited number of licenses issued in Lesotho for the production of medicinal cannabis products. Situated 70 kilometers from the capital city of Maseru, Bophelo’s operating site is an ideal location with ample labor, free water, flat land area, and low crime rates. The favorable high altitude, low humidity climate provides clean and organic growing conditions within the mountainous region. With the motto “Sechaba se tlisa lerou” (community brings wealth), Bophelo highlights the value of community and empowerment of the Basotho people with a focus on the development of women and youth. Bophelo is an indirect wholly owned subsidiary of Halo.
For more information about Bophelo, please visit www.bophelo-bioscience.com
About DNA Genetics
Founded in Amsterdam in 2004, DNA Genetics is a global market leader in the production of high-quality cannabis seeds. DNA adopts a professional, responsible and technical approach in development of its cannabis strains.
Over the last decade, DNA has built and curated an extensive genetic library of cannabis strains. To support this, the company has developed proven standard operating procedures for genetic selection, breeding, and cultivation. It has created some of the most well-known products in the market, by combining its high-quality genetics with its expert growing practices. With a win in every single category of the HIGH TIMES Cannabis Cup, many of the top seed companies in the industry use DNA Genetics within their breeding programs.
For more information about DNA Genetics, please visit www.dnagenetics.com
Cautionary Note Regarding Forward-Looking Information and Statements
This press release contains certain “forward-looking information” within the meaning of applicable Canadian securities legislation and may also contain statements that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Such forward-looking information and forward-looking statements are not representative of historical facts or information or current condition, but instead represent only Halo’s beliefs regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of Halo’s control. Generally, such forward-looking information or forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or may contain statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “will continue”, “will occur” or “will be achieved”. The forward-looking information and forward-looking statements contained herein may include, but are not limited to, statements about anticipated operations and expansion by Bophelo, the receipt of GACP certification and the distribution of cannabis cultivated by Bophelo.
By identifying such information and statements in this manner, Halo is alerting the reader that such information and statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results to be materially different from those expressed or implied by such information and statements. In addition, in connection with the forward-looking information and forward-looking statements contained in this press release, Halo has made certain assumptions. Although Halo believes that the assumptions and factors used in preparing, and the expectations contained in, the forward-looking information and statements are reasonable, undue reliance should not be placed on such information and statements, and no assurance or guarantee can be given that such forward-looking information and statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information and statements. Among others, the key factors that could cause actual results to differ materially from those projected in the forward-looking information and statements are the following: unexpected costs or delays in the completion of the Company’s proposed dispensaries and other operation; negative results experienced by the Company as a result of general economic conditions or the ongoing COVID-19 pandemic; delays in the ability of the Company to obtain certain regulatory approvals; unforeseen delays or costs in the completion of the Company’s construction projects; adverse changes to demand for cannabis products; ongoing projects by competitors that may impact the relative size of the Company’s growing operation; adverse changes in applicable laws; adverse changes in the application or enforcement of current laws, including those related to taxation; increasing costs of compliance with extensive government regulation; changes in general economic, business and political conditions, including changes in the financial markets; risks related to licensing, including the ability to obtain the requisite licenses or renew existing licenses for the Company’s proposed operations; dependence upon third party service providers, skilled labor and other key inputs; and the other risks disclosed in the Company’s annual information form dated April 16, 2020 and available on the Company’s profile at www.sedar.com. Should one or more of these risks, uncertainties or other factors materialize, or should assumptions underlying the forward-looking information or statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected.
The forward-looking information and forward-looking statements contained in this press release are made as of the date of this press release, and Halo does not undertake to update any forward-looking information and/or forward-looking statements that are contained or referenced herein, except in accordance with applicable securities laws. All subsequent written and oral forward-looking information and statements attributable to Halo or persons acting on its behalf is expressly qualified in its entirety by this notice.
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