Abcann Global Corp. (TSX.V: ABCN) (OTCQB: ABCCF) announced Sept 18, 2017 that it had received total proceeds of $11,895,298 from the exercise of an aggregate of 19,185,965 warrants, which puts its cash position at $45 million. Shares of ABCN reacted this morning, rising over 1%.
We reported in August on ABCN/ABCCF that the marijuana company had obtained $15 million in funding from Cannabis Wheaton Income Corp.(TSX.V: CBW) that’s to go towards the construction of its newest marijuana growing facility in Napanee, Ontario, a 100,000 square foot state-of-the-art building that will house a production capacity of 20,000 kg of marijuana annually.
Apparently, Abcann Global is on track with its expansion plans, noting yesterday’s news of its Warrant exercise by Cannabis Wheaton.
Year-to-date, ABCN/ABCCF is up nearly 273%, according to Market Watch and while Financials Trend pegged the stock a Triple Bagger in our August story, since that writing its shares lagged. But with news out of its Warrant exercise, investors need to take a long toke on this stock and begin accumulating.
The Company notes that its plans for expansion is earmarked for mid-2018 and with a bank account full of cash it appears that’s going to be a reality. So, let’s do some simple math. ABCN/ABCCF is forecasting a marijuana growing capability of TEN TO TWENTY TIMES its current production rate of 1,000kg. By the end of this year, ABCN/ABCCF looks to double current production to 2,000kg. That should reflect in higher trading volume – and of course, a higher stock price. So what should be getting high is your portfolio, if you follow marijuana stocks.
A report by PI Financial in May placed a Buy rating on the stock with a target price of $2.25 and while ABCN/ABCCF has lagged since that was released the downturn was not unexpected, considering the marijuana grower hadn’t received the second tranche from its Cannabis Wheaton investor. That is, until now.
PI Financial’s report says, “We estimate that ABcann produces in excess of 250 grams per square foot annually”, noting that “ABCN/ABCCF is among the highest yields within the Canadian [pot] sector.”
Fully diluted, there’s 176 million shares issued and outstanding and with $45 million in cash, that puts the current net tangible book value at north of $0.255 per share – just based on the cash on hand, never mind the real estate, equipment and other assets held by the Company. Based on that, ABCN/ABCCF shares are trading at 3.3X Net Tangible book value, which is WAY BELOW where its stock should trade. But give it some time and ABCN/ABCCF will be driven higher by the market. Patience is a virtue, after all.