Chalice Brands Ltd CHALF

Must read for your DD

[StockGuru2k11]

Oregon-based cannabis oil extractor Golden Leaf Holdings (C.GLH, Forum) opened on the CSE Wednesday at a price that would have made executives shudder.

Having just completed an $8m financing at $1.25 per share, and had long term shareholders agree to a self-policed four month hold on selling to let the share price find its feet, some naughty sod dumped their stake at the open and took just $0.50 for it.

Hey, I guess when you got in at $0.10 a few years back, a 5x return on your money probably looks too good to pass up, especially with the wife going on about Christmas vacations and such.

But 24 hours later, the same stock is on a tear, back up to $0.94 (at the time of writing) and showing no signs of letting up any time soon. That price is 32.39% up over the previous day’s close of $0.71.

Golden Leaf CEO Don Robinson, who used to run consumer packaed goods giant Mars Canada, talked to me yesterday on a Stockhouse podcast about how the company is pulling in $1.2 million per month in revenues presently, and has been for several months now, with the only impediment to growth being the wait for new extractor machines to join their current facility. With those machines now coming in monthly, the aim is to double supply –and revenues - by year’s end.

According to Robinson, those machines take two months to pay themselves off, and the company is working on new tech to expand their capacity by five times the current 20 litre mark.

Buyers pounced on the low priced stock Wednesday and continued to do so Thursday as the stock traced a consistent upwards line, hitting a $57.6m market cap by noon Eastern.

Canopy Growth Corporation (the new name for the Tweed/Bedrocan group) (TSXV:CGC, Forum), which GLH execs use as a comparable in the Canadian space based on revenues, enjoys a $171.6 million market cap currently.

Robinson says Oregon’s market size is some ten times that of the entire Canadian MMPR program currently, with plans afoot to license into Washington State.

Robinson was profiled in the Financial Post this morning, telling Peter Koven, "We’re a marriage of industry experts who don’t have corporate experience with corporate grey-hair adult supervision [,,,] That marriage is really critical.”

On a PR blitz, Robinson later told James West of the Midas Letter, "Our products are sold," adding, "There are 250 or so dispensaries in Oregon and we have a sales force of 10 people who sell our products to those dispensaries. We do grow and intend to grow marijuana, but it is only so we are self-sufficient on our raw material trim, and we want to do that, because we want to be organic. We don’t want to use pesticides, and we don’t want to pay – right now, the trim market in Oregon is about $400/lb, and by being self-sufficient, it’s much less expensive, then our margins go from 45 to close to 80 percent. That’s forward-looking, but that’s what’s in the projection."



Trading volume was significant on the day, at 500,000 sold at the time of writing.