CropLogic hemp farm fully financed through to production
Published 29-MAY-2019 14:37 P.M.
3 minute read
Hey! Looks like you have stumbled on the section of our website where we have archived articles from our old business model.
In 2019 the original founding team returned to run Next Investors, we changed our business model to only write about stocks we carefully research and are invested in for the long term.
The below articles were written under our previous business model. We have kept these articles online here for your reference.
Our new mission is to build a high performing ASX micro cap investment portfolio and share our research, analysis and investment strategy with our readers.
Click Here to View Latest Articles
Cutting-edge digital agricultural technology, CropLogic Ltd (ASX:CLI) has negotiated a new financial package that provides the company with a strengthened balance sheet, as well as the flexibility to fund initiatives that are inherently cyclical because of the requirements of the agricultural industry.
CropLogic has secured US$4.25 million facility (approximately AU$6.25 million) by way of a debt instrument.
This is further to the AU$3 million of equity raised in April, taking total funding secured to over AU$9 million in a four week period, providing full funding through to production, as the company progresses its Industrial Hemp Trial Farm in Central Oregon which has capacity to produce up to 1.1 million pounds of industrial biomass.
If management is able to achieve slightly higher prices than mid-range indications while delivering costs towards the lower end of the stated range, as well as achieving production numbers broadly in line with ‘same site’ comparisons, the pre-tax profit could be as high as $58 million.
Consequently, not only is this an ample and flexible financial arrangement, but it is in no way a stretch from a servicing perspective for a company that has such a buoyant near-term earnings outlook given sale proceeds from the first harvest should be received in late 2019/early 2020.
Financial support reflects quality of asset
Underlining the significance of this development and providing perspective in terms of the group’s ability to readily attract capital and the timely nature of its deployment in terms of the company’s rapid progress, chief executive James Cooper-Jones said, “As we have mentioned in previous announcements, CropLogic’s growth, including the speed at which it is progressing its Industrial Hemp Trial Farm, is gaining the interest of capital markets and industry participants.
“The speed at which we have been able to secure equity and debt finance, the favourable terms therein and the international nature of investors, speaks to this growing global profile of CropLogic.
“It is a great credit to my team that rapid progress on our Industrial Hemp Trial Farm continues, with drip tape and mulch plastic beginning to be laid in the last week.”
Such has been the support for CropLogic that its investor base has broadened significantly, now including a consortium of North American and European investors led by a UK-based fund with connections and experience in investing in the industrial hemp industry.
Gaining support from this group is also important strategically as it is part of a network with links to other industry players.
Importantly, the consortium is incentivised by the potential to receive royalties linked to the quantum of CropLogic’s industrial hemp global sales.
Broader agricultural experience proves vital
Of course, CropLogic is no newcomer to the agricultural industry with experience across a range of crops, a factor that has assisted the group in making strong progress relative to many other players in the industry.
The following shows the company’s progress in the installation of drip tape and mulch plastic in readiness for the June planting season.
This is no mean feat given it is only two months since the company received the green light to establish a 150 acre trial farm, and only a month since the group received approval to increase the farm from 150 acres to 500 acres.
Whether it be the challenges of citrus growers in the Sunraysia region of Australia, meeting the needs of Yakima Valley hop growers in Washington or assisting hemp growers in Oregon manage their crops, CropLogic continues to impress with its technology and related services.
General Information Only
S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.
Conflicts of Interest Notice
S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.
Publication Notice and Disclaimer
The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.
Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.
This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.