– Still no word on cannabis production facility startup
Some work has continued at the Aurora Sun cannabis growing facility in Medicine Hat, but financial releases this week again give no clues about when it could begin operating.
They do state however, that no new major spending is planned until the end of the calendar year on the facility that was to be operating in part last June.
The company began a heavy pullback of capital projects and sold off non-core parts of its sprawling business in late 2019 as the recreational cannabis market failed to live up to industry projections.
Financial statements released this week say a slight increase in revenue combined with operating costs lower by one quarter means the company could meet its goal of becoming cash positive by the end of the 2020 calendar year.
“We continue to take necessary steps to execute our plan and transform our business to achieve sustainable profitability, and ultimately positive cash flow,” stated Miguel martin, who became Aurora’s CEO in July.
He again stressed the strength of medical sales and Aurora’s low production costs in the “Sky Class” growing facilities.
That includes Aurora Sky in Leduc, and Aurora Sun, a 1.6-million square-foot growing and initial processing plant in northwest Medicine Hat.
The company had said they planned to commission a small portion of the facility in
June 2020, then add finished space as demand warranted.
This spring however, the company announced the closure of five smaller facilities across Canada as it aimed to “rebalance” production to demand that was slower to develop than forecasted.
Net revenue was $67.8 million during the recently concluded quarter, which is the first of Aurora’s unique fiscal year.
The adjusted loss was $57.9 million, which includes $47.4 million in restructuring costs and termination payments.
Capital expenditures were $13.9 million, part of which was spent on equipment or construction activities in Medicine Hat, the Aurora Sky Nordic facility in Denmark, which now has its European sales licence, and the Polaris derivatives facility near Edmonton.
Stock rockets, falls back
Aurora shares tripled in value at the beginning of the week on News of a coronavirus vaccine and results of state and federal election in the U.S., but lost half the gain after the company announced a new share offering Tuesday.
The victory of Democratic presidential nominee Joe Biden led investors to speculate about relaxation of federal pot restrictions, and voters in four states — including Montana — endorsed legalizing recreational cannabis.
Martin discussed the potential market in the U.S.
“Very positive news at the state level,” he said, but warned the federal situation is still unclear.
“The experiences that the Canadian (Cannabis producers) have ... as the largest federal construct on manufacturing, packaging, production, sales and marketing — all of those things instantly becomes really valuable.”
A ballot initiative in Montana saw about 55 per cent of voters support the creation of a legal marijuana industry and the setting of the legal age at 21. Similar measures passed in Arizona,
South Dakota and New Jersey.
Aurora stock sat at US$5.80 on Nov. 4, but rose to US$15.83 on Monday. They closed the week at US$9.28.