Labat’s Lesotho operation has clinched an off-take agreement with UK-based New Frontier Holdings valued at R2 billion over the next five years. The JSE-listed company says with the Covid-19 pandemic behind it, it’s on track to export 18 000 kg of cannabis over that time frame from its revamped Lesotho facility.
Labat is hoping that the lucrative export deal with justify the almost R100 million investment it made in Lesotho last year. The group has bet heavily on the much-anticipated African cannabis boom, aiming to establish a vertically-integrated cannabis company with interests ranging from research and development to farming and retail. It has been buying a number of companies since it announced in August 2019 that it was pursuing a cannabis and healthcare strategy.
In November 2019, Labat purchased two major assets in Lesotho, paying :
R75 million for 100% of The Highly Creative (THC) from a group of entrepreneurs, including current CEO Mike Stringer and COO Stanton van Rooyen;
R20 million for 80% of Medigrow Lesotho from Solid Oak Holdings.
It paid for both through a share issue, valuing each share at R1.00. Labat is integrating the two operations into a new entity, Labat Botanicals and was hoping to produce three cannabis products by May 2020:
medical grade cannabis flower,
CBD and THC oils and concentrates, and
active pharmaceutical ingredients.
However, the Covid-19 pandemic disrupted all Lesotho’s export aspirations and the company is still awaiting certification for its revamped facility. Once that’s in place it hopes to export 4 000 kg in the first 12 months thereafter, 6 000 kg the following year and 8 000 over the remainder of the contract period.
“Using our genetics bank, we will select high-quality strains to grow in our facility. These strains will be carefully selected and grown in a strictly controlled environment to ensure product of the highest quality is produced for the export market,” the group said.
The group said Medigrow Africa has an interest in a number of licences in both Lesotho and other African countries, which allow it to cultivate, harvest, manufacture, distribute, import and export cannabis and that it was seeking to buy into the group’s other African operations in time. Labat says Medigrow had a methodical and in-depth business plan which aimed at providing a lower- to mid-level tier pharmaceutical product to Europe and a high-THC product for research and other markets.