Zenabis Provides Operations Update and Highlights for December 2019

Published: February 7, 2020

Zenabis Provides Operations Update and Highlights for December 2019

Zenabis Global Inc. provided an update on its recent facility construction and licensing activities, sales and marketing highlights and recent cannabis production results.

December 2019 delivered our largest-ever harvest. This completes a whole year of successful harvests from Zenabis Atholville, since the creation of Zenabis Global Inc. In that time, we have increased Atholville monthly harvest yields by 800%, which is an amazing achievement by the entire Zenabis team,” said Kevin Coft, Chief Executive Officer of Zenabis. “Of the total 2019 Atholville harvest figure of nearly 20,000 kg, 20% was harvested just in December. This shows us what steady-state cultivation and production at Atholville can deliver. We are looking forward to achieving steady-state production at Langley with more license amendments in progress.”

“We also realized strong indicative demand from our provincial partners in December, resulting in our largest-ever volume of units shipped in the month. We are excited about what 2020 will bring,” continued Mr. Coft.

Cannabis Production Summary

In December 2019, Zenabis realized a total harvest weight of 3,841 kg of dried cannabis.

The amount harvested at Zenabis Atholville for the twelve months ending December 2019 outperformed the revised design capacity of the flower rooms by 0.93%, harvesting a total of 19,420 kg of dried cannabis. A month-to-month comparison of actual harvests compared with harvest forecast based on the revised design capacity for the last twelve months 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

Dec

2019

Total

Actual Harvest Weight (kg)

474

480

518

809

908

756

1,238

1,912

2,089

3,586

2,810

3,841

19,420

Revised Design Capacity
Harvest Weight (kg)1

467

643

539

796

895

716

1,097

1,357

1,715

3,601

2,940

4,476

19,242

Difference (kg)

7

(163)

(21)

13

13

40

141

555

374

(15)

(130)

(635)

179

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)%

(14.2)%

0.93%

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”.

In December 2019, Zenabis completed 23 harvests at Zenabis Atholville. Zenabis did not complete any harvests at Zenabis Langley or Zenabis Stellarton.

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

The following table sets out Zenabis’ estimated aggregate monthly harvest for Zenabis Atholville, Zenabis Stellarton and Zenabis Langley Site A – Part 1 from September 2019 to January 2020.

Sept

2019

Oct

2019

Nov

2019

Dec

2019

Jan

2020

Total

Forecast (kg)3

1,731

3,758

3,881

4,2002

3,576

17,146

Actual (kg)

2,089

3,586

3,332

3,841

12,848

2

Zenabis calculates the Revised Design Capacity Harvest Weight based on a continuous harvest cycle. A variance between the Forecast and Revised Design Capacity Harvest Weight for Zenabis Atholville would be a result of a variance in the average continuous flower days during the month.

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.

Construction and Facility Licensing Update

Zenabis Langley

Zenabis Langley Part 1 and Part 2A are licensed and operational. Zenabis Langley Part 2B is substantially complete and the license amendment was submitted in December 2019. After reviewing the construction and licensing progress of Zenabis Langley, Zenabis decided to amend the Part 2B license amendment submission further to include more square footage that was originally intended for Part 2C. This includes an increase of approximately 2,500 sq. ft. of flower space and 18,000 sq. ft. of operational space which includes drying rooms and packaging rooms. Construction of Zenabis Langley Part 2C is ongoing but at a reduced pace as the Company’s focus for Zenabis Langley is for the existing licensed or substantially completed space 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 40,500 sq. ft. of flower room space (one flower room) and
18,000 sq. ft. of other operational spaces (includes drying rooms and
packaging rooms)

•  Substantially complete

•  License amendment submitted in December 2019

Part 2C

32,000 kg

•  Consists of 82,200 sq. ft. of flower room space (two flower rooms) and
86,300 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

Compassionate Pricing Program

To increase medical patient access to cannabis products, and to compete with the illicit market, Zenabis will be lowering its medical cannabis pricing across the board for all applicable medical patients and is offering compassionate pricing on cannabis products including dried flower and cannabis oil products for qualifying customers through its Compassionate Pricing Program.

Recent News

View All News Items

Latest Article

Legalization 2.0: IP and Regulatory Considerations for Edibles, Extracts and Topicals

Legalization 2.0: IP and Regulatory Considerations for Edibles, Extracts and Topicals

The legalization of cannabis edibles, extracts and topicals will expand the cannabis market and create new opportunities for producers, innovators and investors. According to a recent report from Deloitte, the Canadian market for these new cannabis products is expected to be worth $2.7 billion annually, with edibles accounting for more than half ($1.6 billion).

 

Read Article