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Zenabis Global Inc.

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Zenabis Provides Operations Update and Highlights for November 2019

Canada NewsWire

VANCOUVER, Jan. 16, 2020 /CNW/ - Zenabis Global Inc. (TSX: ZENA) ("Zenabis" or the "Company") is pleased to provide an update on its recent facility construction and licensing activities, sales and marketing highlights and recent cannabis production results.

Kevin Coft, Chief Executive Officer of Zenabis, stated, "We have now achieved steady-state operations at Zenabis Atholville, where our focus has transitioned to driving further cultivation efficiencies. In November we had our initial harvest at Zenabis Langley which, while significantly under the design capacity, achieved very high THC results, including our Ultra Sour cultivar yielding 26.5% total THC. This highlights the ability of our Langley closed greenhouse design to grow high-quality cannabis."

Cannabis Production Summary

In November 2019, Zenabis realized a total harvest weight of 3,332 kg of dried cannabis.

The amount harvested at Zenabis Atholville for the three months ending November 2019 exceeded the revised design capacity of the flower rooms by an average of 2.8%, compared to 13.7% in the three-month period ending October 2019. A month-to-month comparison of actual harvests compared with harvest forecast based on revised design capacity between January 2019 and November 2019 for Zenabis Atholville is provided in the table below.

Revised Design Capacity
Performance at Zenabis
Atholville

Jan

2019

Feb
2019

Mar
2019

Apr

2019

May

2019

June

2019

July

2019

Aug
2019

Sept

2019

Oct

2019

Nov

2019

Total

Actual Harvest Weight (kg)

474

480

518

809

908

756

1,238

1,912

2,089

3,586

2,810

15,580

Revised Design Capacity
Harvest Weight (kg)1

467

643

539

796

895

716

1,097

1,357

1,715

3,601

2,940

15,015

Difference (kg)

7

(163)

(21)

13

13

40

141

555

374

(15)

(130)

564

Difference (%) – Revised
"Performance Ratio"

1.5%

(25.3%)

(3.9%)

1.6%

1.5%

5.6%

12.9%

40.9%

21.8%

(0.4)%

(4.4)%

3.8%


1 The Revised Design Capacity Harvest Weight was derived by converting the actual square footage of flower room space and the forecast canopy for each
specific flower room into a kilograms per room per day figure based on Zenabis' historical yield data at the Zenabis Atholville facility based on the yield
performance in the three months ending June 2019 for revised Design Capacity. The Revised Design Capacity Harvest Weight in the table above is the
harvest weight that would have resulted if the Design Capacity Yield Per Day for a room was multiplied by the Effective Flower Room Equivalent Days, as
defined under "Performance Ratio"

 

Zenabis Langley's initial harvest produced 342 kg of dried cannabis, which is approximately 20% of its design capacity. Zenabis has identified a variety of ramp-up challenges, which have generally been addressed, with the exception of lighting. Zenabis is in the process of installing additional lighting improvements, in order to improve yield in the fall and winter seasons. While the yield from Zenabis Langley's initial harvest was lower than the initial forecast, the quality of cannabis produced was high based on the cannabinoid yield of the cultivars harvested. The first harvest from Zenabis Langley recorded the Company's second highest ever THC result for Ultra Sour with 26.5% total THC, and three of the cultivars harvested (Ultra Sour, Wappa and MK Ultra) achieved above the company's expected total THC yield. Please refer to the table below for a summary of the total THC yield by cultivar from Zenabis Langley's first harvest.

Cultivar

Realized Total
THC2

Max. Expected
Total THC

Citrique

17.5%

19.0%

MK Ultra

22.8%

19.0%

Sensi Star

15.5%

16.0%

Ultra Sour

26.5%

21.0%

Wappa

19.7%

18.0%


2 Total THC levels on any finished goods sold may differ from the Realized Total THC. Realized Total THC was derived by analytical testing performed by
a third-party laboratory on the particular lot

 

In November 2019, Zenabis completed 15 harvests at Zenabis Atholville, one harvest at Zenabis Langley and one harvest in Stellarton. 

Harvest Forecast – Zenabis Atholville, Zenabis Stellarton and Zenabis Langley Site A – Part 1

For its existing licensed facilities of Zenabis Atholville, Zenabis Stellarton and Zenabis Langley Site A – Part 1, Zenabis expects to produce approximately 7,7763 kg of dried cannabis from December 2019 through to January 2020. The following table sets out Zenabis' estimated aggregate monthly harvests for Zenabis Atholville and Zenabis Stellarton and Zenabis Langley Site A – Part 1 for the next two months.


July

2019

Aug

2019

Sept

2019

Oct

2019

Nov

2019

Dec

2019

Jan

2020

Total

Forecast (kg)3

1,212

1,579

1,731

3,758

3,881

4,200

3,576

23,943

Actual (kg)

1,238

1,996

2,089

3,586

3,332



12,241


3 This forward-looking estimate of future harvest results is based on the following material assumptions: (1) Zenabis Stellarton operates at the published
design capacity on a room by room basis for the cultivation space that is licensed and in cultivation at the forward-looking periods noted; (2) Zenabis Atholville
rooms operate based on the current flower schedule and continue to achieve revised Design Capacity; and (3) the first harvest from Zenabis Langley Site
A – Part 1 in November 2019 is 20% of Design Capacity

 

Zenabis intends to provide monthly cultivation results for Zenabis Langley upon receipt of all cultivation license amendments for these phases and once this facility is operating at a stable state. Once Zenabis completes the construction and licensing of its facilities and enters into steady state production, harvest forecasts will no longer be provided and instead actual production achieved will be disclosed in our quarterly MD&A.

Construction and Facility Update

Zenabis Langley

Zenabis Langley Part 1 and Part 2A are licensed and operational. Zenabis has reached substantial completion on Part 2B. Zenabis has submitted a cultivation license amendment for Part 2B in December 2019 and expects to receive Health Canada approval of that amendment in Q1 2020. Construction of Zenabis Langley Part 2C consists of a design capacity of 32,000 kg and is ongoing but at a reduced pace as the Company's main focus for Zenabis Langley is to achieve operational excellence and operate at a steady state.

A summary of construction status by phase is provided below:

Phase

Design Capacity

Description

Part 1

9,900 kg

• Licensed and operational

Part 2A

39,400 kg

• Licensed and operational

Part 2B

14,800 kg

• Consists of 38,000 sq. ft. of flower room space (one flower room)

• Substantially complete

• Licensed amendment submitted in December 2019

Part 2C

32,000 kg

• Consists of 82,200 sq. ft. of flower room space (two flower rooms) and
122,300 sq. ft. of other operational spaces (includes drying rooms,
packaging rooms, mother space and vegetation space)

• HVAC, flooring and shade screen installation is ongoing

• Security equipment and lighting installation is substantially complete

 

Zenabis Stellarton

Zenabis has submitted a sales license application for Zenabis Stellarton and expects to use this site as a fulfilment centre and packaging/processing facility upon receipt of this license.

Zenabis Delta

As the Company continues to focus on becoming cash flow positive, the further conversion of Zenabis Delta is under review to assess whether its analytical and laboratory services are justified by market demand. Zenabis is also considering other plans for the Delta facility if it determines market demand is insufficient.

Licensing Update

Zenabis is currently in the process of various licensing applications for Zenabis Delta, Zenabis Langley, Zenabis Stellarton and the Zen Craft Grow program as outlined in the table below:

License Submission

Submission Month

Annual Design Capacity

Zenabis Delta – Analytical Testing

May 2019

N/A

Zen Craft Grow – Grower 1

July 2019

350 kg

Zenabis Stellarton – Sales License

October 2019

N/A

Zenabis Langley Site A – Part 2B

December 2019

14,800 kg

Zenabis Langley Site A – Part 2C

TBD4

32,000 kg

4 Expected submission timeline subject to receipt of prior license or license amendment for each facility

 

Sales and Marketing Update
Shoppers Drug Mart

Zenabis recently received its first purchase order of medical cannabis for the Shoppers Drug Mart ("Shoppers") platform, Medical Cannabis by Shoppers.

Medical cannabis patients can soon purchase Zenabis' premium dried flower, light softgels, and cannabis oil from Shoppers' online platform, which recently announced the completion of its national roll-out.

Ontario Cannabis Store

Zenabis recently completed its first shipment to Ontario Cannabis Store ("OCS"). The fulfilment of the purchase orders placed by OCS will shortly see a range of Zenabis pre-roll and dried flower products enter the largest Canadian provincial market5, under the Zenabis-owned Namaste (www.namaste.com) and Blazery (www.blazery.com) brands.

As operations ramp-up in multiple locations resulting in a significantly greater number of harvests per month, more time will be required to consolidate data and release publicly as part of our regular Operational Updates. Consequently, the Company expects to release its Operational Updates for a given month within 6 weeks following the end of such month. 

Please view the following link for Zenabis operational update presentation:
https://www.zenabis.com/docs/zenabis-operations.pdf

About Zenabis

Zenabis is a significant Canadian licensed cultivator of medical and recreational cannabis, and a propagator and cultivator of floral and vegetable products. Zenabis employs staff coast-to-coast, across facilities in Atholville, New Brunswick; Delta, Aldergrove, Pitt Meadows and Langley, British Columbia; and Stellarton, Nova Scotia. Zenabis currently has 96,400 kg of licensed cannabis cultivation space across four licensed facilities. Zenabis has 3.5 million square feet of total facility space dedicated to a mix of cannabis production and cultivation and its propagation and floral business.

Zenabis expects its Zenabis Atholville, Zenabis Stellarton and Zenabis Langley facilities to have a licensed annual production capacity of 143,200 kg of dried cannabis by the end of 2020. The Zenabis brand name is used in the cannabis medical market, the Namaste, Blazery, and Re-Up brand names are used in the cannabis adult-use recreational market, and the True Büch brand name is used for Zenabis' kombucha products.

 

Forward Looking Information

This news release contains statements that may constitute "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking information may include, among others, statements regarding the future plans, costs, objectives or performance of Zenabis, or the assumptions underlying any of the foregoing. In this news release, words such as "may", "would", "could", "will", "likely", "believe", "expect", "anticipate", "intend", "plan", "estimate" and similar words and the negative form thereof are used to identify forward-looking statements. In this news release, forward-looking statements relate, among other things, to: the projected kilogram yield of licensed facility space and facility space in the process of, or scheduled for, construction and/or licensing; our expectations for future harvests, including the THC yield of those harvests; the expected timing and completion of current and planned conversion, expansion and optimization of our facilities, including Zenabis Langley; our plans for Zenabis Delta; the expected submissions of license amendment applications and site evidence packages; the licensing of our facilities and projected timing thereof; our expectations for our extraction projects, equipment and capacity; our expectations for processing output;; and the expected content of future operational updates. Forward-looking statements should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether, or the times at or by which, such future performance will be achieved. No assurance can be given that any events anticipated by the forward-looking information will transpire or occur. Forward-looking information is based on information available at the time and/or management's good-faith belief with respect to future events and are subject to known or unknown risks, uncertainties, assumptions and other unpredictable factors, many of which are beyond Zenabis' control. These risks, uncertainties and assumptions include, but are not limited to, those described in the shelf prospectus dated April 9, 2019, a copy of which is available on SEDAR at www.sedar.com and could cause actual events or results to differ materially from those projected in any forward-looking statements. Furthermore, any forward-looking information with respect to available space for cannabis production is subject to the qualification that management of Zenabis may decide not to use all available space for cannabis production, and the assumptions that any construction or conversion would not be cost prohibitive, required permits will be obtained and the labour, materials and equipment necessary to complete such construction or conversion will be available. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release. Zenabis does not intend, nor undertake any obligation, to update or revise any forward-looking information contained in this news release to reflect subsequent information, events or circumstances or otherwise, except if required by applicable laws

For more information, visit: https://www.zenabis.com

SOURCE Zenabis Global Inc.

View original content: http://www.newswire.ca/en/releases/archive/January2020/16/c2923.html

Media Relations: Email: media@zenabis.com, Phone: 1-855-936-2247: Investor Relations, E-mail: invest@zenabis.com, Phone: 1-855-936-2247Copyright CNW Group 2020

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