Struggling Australian junior to grow cannabis in Canada
Trying to stay afloat in a tough environment, struggling Australian gold prospector Capital Mining (ASX:CMY) has decided to diversified its business by tapping into an emerging, but controversial market: medical marijuana.
The company said Monday it has agreed to acquire a 49% stake in Canadian medical cannabis grower and distributor Broken Coast Cannabis (BCC), which currently has the capacity to produce 720,000 g a year.
It added it has also signed a heads of deal to buy all of the issued shares of Cannan Growers, a distributor of bulk wholesale cannabis, industrial hemp and respective by-products and derivatives.
The move makes of Capital Mining the first ASX-listed, Canada-based company to hold a stake in a licensed marijuana grower.
But the miner, which owns gold, base metals, platinum and uranium exploration assets in New South Wales and South Australia, is not alone in this emerging business. Interest in the market has been growing since Health Canada decided to allow licensed commercial growing of medical marijuana in April 2014.
Since then a number of juniors, mostly Canadian, have announced they are considering growing cannabis. The country's junior mining sector has a history of seeking to ride the coattails of major investment fads, which became most evident in the 1990s, when a bunch switched into technology during IT boom and then back to mining once the bubble burst.