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Buzz on the Bullboards: Winners & Losers in Energy, Tech, & Cannabis

Stockhouse Editorial
2 Comments| August 26, 2021

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(Hexo Corp. stock chart – May 2021 to August 2021. Click to enlarge)

Markets on Bay Street and Wall Street have seen a tumultuous close ride as we near the end of the summer season. Three of the biggest contributors to recent growth (and recent dips) are the tech, energy, and cannabis markets. For one reason or another, they have investors talking ….

Shares of HEXO Corp. (TSX: HEXO, Forum) have plunged more than 58% since May 2021, and the tide didn’t turn after announcing that it had closed of its underwritten public offering for total gross proceeds to the company of $144,786,070.80 (USD). The Company sold 49,080,024 units of the Company at a price of $2.95 (USD) per unit under the offering, including 1,622,396 Units sold pursuant to the partial exercise of the underwriters’ over-allotment option.

Net proceeds will be used to satisfy a portion of the purchase price payable to the Redecan shareholders on the closing of the Redecan acquisition and for expenditures in relation to Hexo's US expansion plans.

It has been a big week for HEXO, who also made the jump to the NASDAQ Capital Market from the New York Stock Exchange.

HEXO is a licensed producer of innovative products for the global cannabis market. HEXO serves the Canadian recreational market with a brand portfolio including HEXO, UP Cannabis, Original Stash, Bake Sale, Namaste, and REUP brands, and the medical market in Canada, Israel, and Malta.

The Tinley Beverage Company Inc. (CSE: TNY, Forum) has signed an agreement with BevCanna.

BevCanna will produce Tinleys Classics, the Canadian version of Tinley’s California-produced Tinley’s Tonics cannabis beverages. It will also produce and distribute the full line of Tinley’s ready-to-drink, adult beverage-inspired sparkling Tinleys Classics, Canadian versions of Tinley’s Tonics, currently available in California.

The line includes the Moscow Mule-inspired Tinley’s Tonics High Horse, winner of First Place at California’s prestigious Emerald Cup, the world’s largest cannabis competition. BevCanna will also produce Tinley’s blue agave & lime-inspired Stone Daisy, the juniper berry & lime-inspired Juniper Sky and the blue agave, grapefruit & lime-inspired Mystic Dove.

The beverages will be modified slightly for the Canadian market to reflect Canadian consumer tastes, formulations, packaging, and regulatory requirements.

The beverages will be offered in 12 fl. oz bottles, each containing a micro-dose of THC to provide a light effect comparable to a single adult beverage. Made with premium botanicals and non-alcoholic flavours often found in national-brand spirits, along with non-cannabis-derived botanical terpenes blended to match the Pineapple Jack strain, the beverages are vegan and gluten-free. They’re also crafted with Vertosa cannabis emulsion technology, combined with Tinley’s unique terpene infusion methodology, which together is designed to accelerate on-set and provide a full-flower, euphoric effect reminiscent of the Pineapple Jacks Sativa strain.

Tinley’s will leverage BevCanna’s extensive experience in producing beverages at scale, as well as its sales license partnership for distribution to provincial buying groups. BevCanna is now in full commercial production, with imminent delivery for various clients to provincial distribution boards, including the Ontario Cannabis Store, the largest distributor of cannabis products in Canada. Great North Distribution will sell the Tinleys products throughout Canada.

“We’re very excited to be selected as the Canadian manufacturing partner for Tinley’s carbonated products,” said Melise Panetta, President of BevCanna.

“Their award-winning products have an exceptional following with consumers internationally, and we’re eager to offer them to the Canadian market.”

“We’re very pleased to be adding another prominent white-label partner to our growing roster of leading brands,” Panetta continued. “We’re confident that we’ll be able to bring Tinley’s to market quickly, while also satisfying the strong demand we’re seeing for additional full-service, white-label beverage manufacturing services.”

“BevCanna has state of the art equipment that can uniquely accommodate the requirements of our complex formulation methodology and formats,” said Ted Zittell, director of Tinley’s.

“We’re excited to bring our products from California back to our home country and are confident these beverages will provide new, unique and compelling cannabis beverage options for Canadian consumers.”

Tinley manufactures the Beckett’s Classics and Beckett’s 27 line of non-alcoholic, terpene-infused spirits and cocktails.

Beckett’s products are available in mainstream food, beverage, and specialty retailers, as well as online, across the United States as well as in grocery and specialty stores in Canada. Cannabis-infused versions of these products are offered under the Tinley’s brand in licensed dispensaries and home delivery services throughout California, with expansion to Canada underway.

A diversified health & wellness beverage and natural products company, BevCanna develops and manufactures a range of alkaline, plant-based and cannabinoid beverages and supplements for both in-house brands and white-label clients.

Sponsored by
Lithium Chile Signs Definitive Agreement & Begins Drill Program On Production Test Well On The Arizaro Property, Argentina

Aleafia Health Inc. (TSX-V: ALEF, Forum) closed a $10 million senior secured term (non-revolving) credit facility.

“This credit facility provides us with greater financial flexibility to pursue strategic opportunities and continue the robust sales growth realized during our most recent quarter. This transaction improves our capital structure and provides a lower cost of capital that we believe directly benefits our shareholders,” said Aleafia Health CEO Geoffrey Benic.

“Our sales momentum across multiple adult-use product categories, continued scaling of our medical cannabis ecosystem, and the near-term harvest of our largest outdoor cannabis crop to date sets the stage for a strong second half of 2021.”

The full amount of the credit facility was drawn down by the company on closing. The credit facility carries a 12-month term, with an option for early repayment, and accrues interest at a rate of 12% per annum, with the interest and principal amounts due upon maturity.

The outstanding amount, together with accrued and unpaid interest, may be repaid by the company at any time. The financing is secured by first-lien mortgages on the Paris, Ontario and Grimsby, Ontario production facilities.

As partial consideration for the credit facility, Aleafia has granted one million common share purchase warrants to the lender. Each purchase warrant entitles the lender to acquire one common share at an exercise price of $0.32 until August 20th, 2023.

The net proceeds from the credit facility are expected to be used to support several growth initiatives, including improved product availability in the adult-use business, accelerating onboarding of new employer relationships under the exclusive Unifor agreement, and operational enhancements at its manufacturing facility in Paris, Ontario.

A federally licensed Canadian cannabis company offering cannabis health and wellness services and products in Canada, Aleafia Health owns three licensed cannabis production facilities and operates a strategically located distribution centre in Ontario.

PyroGenesis Canada Inc. (TSX-V.PYR, Forum) recently saw a boost with one of its partners, HPQ Silicon Resources Inc. (TSX-V: HPQ, Forum) with whom PYR is developing a process to permit the one-step transformation of quartz (SiO2) into high purity silicon (Si) and develop a process that can use this material as feedstock, to make a wide range of nano / micro spherical powders.

HPQ signed a Memorandum of Understanding with EBH2 Systems SA, a Swiss company that possesses a proprietary electrolysis technology that can efficiently extract, from virtually any water source including salt water, a clean hydrogen also called green hydrogen that can be used to create low-cost electricity with no environmental impact.

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Tech developer and provider Quarterhill Inc. (TSX:QTRH, Forum) released details of the $4.1 million (CAD) contract from the Illinois Department of Transportation (IDOT) it was awarded this week. The initial term of this agreement is four years with an option to renew for six additional years. The purpose of this contract is to maintain and maximize performance of the statewide Weigh-in-Motion network that is used to enforce federal regulations and protect IDOT's infrastructure from damage caused by overweight trucks.

(Image via Extreme Vehicle Battery Technologies Corp.)

Extreme Vehicle Battery Technologies Corp. (CSE: ACDC, Forum) has shipped its first IoniX Pro Home SmartWall only eight months after announcing specs for the device.

Pictured above, the first device is destined for an owner in Canada, the SmartWall stores energy captured by solar panels or from the grid and keeps it in reserve, enabling owners to customize their energy usage. SmartWalls can be connected for larger battery storage, facilitating the powering of a home completely independent from the grid.

The company completed the building and testing alongside its subsidiary, IoniX Pro Battery Technologies. Other products by IoniX Pro include the TITAN EnergyCore, The RV Freedom, the Smart Charger and the Trilogy Vision electric vehicle.

Via a news release, Bryson Goodwin, EV Battery Tech's President and CEO, commented,

“This is truly a pivotal moment for our company and we even met our aggressive schedules despite global slowdowns from COVID-19, battery cell shortages and chip shortages. I am so proud of our design and engineering teams.”

EV Battery investors have seen the company achieve 100% sales growth … though overall it seems traders have lost money elsewhere, across the board. At least, according to the results of last week’s survey on our main page.

Turning to our latest investor pulse poll, we are officially in election season in Canada. Which party do you think would best serve Canada’s capital markets following the next federal election? Let us know your thoughts by clicking the poll image below to cast your vote.

(Click the image to vote.)

Natural gas play CGX Energy Inc. (TSX-V: OYL, Forum), along with the majority-owned subsidiary of Frontera Energy Corporation (TSX: FEC, Forum), and its joint venture partner in the Demerara and Corentyne blocks, provided traders with an update on spud of the Kawa-1 well.

Located in the northeast quadrant of the Corentyne block, approximately 200 kilometers offshore from Georgetown, Guyana. The water depth is approximately 355 meters (1174 ft) and the expected total depth of the Kawa-1 well is 6,685 meters (21,932 ft).

Additionally, the Joint Venture has exercised its option to drill a second well with Maersk Drilling Holdings Singapore Pte using Maersk Discoverer.

(On August 22md, 2021, the Kawa-1 well spudded. The Joint Venture expects the Kawa-1 well to reach total depth in the first half of December 2021. Image via Frontera Energy Corporation.)

From the news: Chairman of Frontera’s Board of Directors and Co-Chair of CGX’s Board of Directors, Gabriel de Alba called this substantial progress in realizing the value of their investments in Guyana.

“The Joint Venture has spud the Kawa-1 well, which we believe is one of the most exciting exploration wells in the world. The Joint Venture has also exercised its option to drill a second well offshore Guyana under similar terms and conditions. I am pleased with this major operational milestone for Frontera and CGX and appreciate the ongoing support of the Guyanese government, our employees, and our other various partners as we work together to maximize benefits for all of our stakeholders.”

Canadian energy company Athabasca Oil Corporation (TSX: ATH, Forum) has increased its corporate liquidity by approximately $100 million (CAD).

This increase was enabled through cash consideration and the release of restricted cash that was securing letters of credit. These transactions further bolster its liquidity position with a 60% increase in pro forma unrestricted cash balances to approximately $265 million (CAD).

Athabasca believes the market for Canadian heavy crude is improving. Expanded basin egress capacity should provide Canadian producers with improved access to the global heavy oil market in the future. At the same time, modest growth forecasts for Canadian oil production are expected to drive excess egress capacity.

As a result, Athabasca believes conditions will emerge for lower volatility compared to what has been experienced in recent years and Western Canadian Select heavy oil in Edmonton may be among the most valuable global crude benchmarks.

Athabasca has assigned its Keystone Base service of approximately 7,200 bbl/d of blended bitumen capacity and the Development Cost Agreement in relation to the Keystone XL pipeline to an industry player.

It has also entered into a seven-year marketing agreement with the counterparty for 15,000 bbl/d of heavy oil that will diversify its sales to the US Gulf Coast once the incremental Keystone Base service becomes available to the industry.

The marketing agreement has customary and additional fees including a flow-through pipeline tariff when the Gulf Coast service becomes available. This transaction increases corporate liquidity by approximately $80 million through the recovery of a deposit and the release of restricted cash that was securing existing letters of credit.

Additionally, Athabasca Oil has executed a sale and assignment agreement of its 20,000 bbl/d TMX pipeline service to a downstream player for a $20 million cash consideration.

Athabasca believes that the timing for monetizing the service is optimal as it receives cash consideration today while still being able to participate in the benefits of the construction of the pipeline through an improved local basin differential outlook.

Finally, we look to Calgary-based independent oil and natural gas company Surge Energy Inc. (TSX:SGY, Forum).

Focused on the development, exploitation, production, and acquisition of oil and natural gas reserves in the Midland Basin of West Texas, SGY has had a productive summer.

Surge closed its $160 million southeast Saskatchewan light oil acquisition, also closed new credit facilities, saw the approval of share consolidation, and released hopeful 2022 guidance.

For a full rundown on this news, click here.

We know that the next week will bring more certainty for investors, regardless of what it brings in terms of news. The more engrained a situation, the clearer the idea of how it will play out. Buzz on the Bullboards always brings you the Stockhouse community view on where things are and where things are going, and next week will be no different.

For previous editions of Buzz on the Bullboards: click here.

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FULL DISCLOSURE: Extreme Vehicle Battery Technologies Corp. and PyroGenesis Canada Inc. are clients of Stockhouse Publishing.

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August 26, 2021

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