California Gold Mining Inc CFGMF

If Canopy Growth is making a Big acquisition in the U.S...

[GUNSS]

If WEED.to is making a large acq. in the U.S. that has to be good for companies with U.S. assets like CGM. Acerage Holdings, the company that Canopy might be buying, has a complex network of 19 State licenses and ownership interests, multiple cannabis and hemp and CBD product segments. By contrast, CGM has a single, high value, niche, high CBD content hemp seed propagation segment with a single greenhouse in a singe State of the U.S.

If the company could get a 2nd & 3rd greenhouse up and running next year, that would be quite attractive for an acquirer. CGM is ranked #162 on my list of 295, sorted by Enterprise Value. There are many dozens of companies with market caps 3x that or more the size of CGM's market cap.

I think CGM's hemp seed business will be acquired at a mutiple of its annual revenue. That multiple? I don't know. 2x to 10x if I had to guess. And, it won't need to be on a trailing 12-month revenue basis. Once greenhouse #1 is fully operational at full capacity, potential acquirers will know what future cash flow scenarios look like at each greenhouse (if there are more than 1)...

Unlike the vast majority of cannabis or hemp peers, this company has 55M shares outstanding and no near-term need to issue new shares. They have the construction of the first GH fully paid for with a US$3M bridge loan. The all-in cost is US$2M, so they have US$1M left over for general corporate purposes.

[HereForGood]

This post has been removed in accordance with Community Policy