The Green Organic Dutchman Holdings Ltd (TSX:TGOD) (OTCQX:TGODF) announced Friday that “significant progress” has been made towards the completion of its facilities in Hamilton, Ontario and Valleyfield, Quebec.
The company said it identified a need for design modifications during the construction process. As a result, engineering design improvements will bump up forecasted domestic productive capacity to 202,500 kilograms from 156,000 kilograms.
The design improvements are being implemented in phases to leverage “efficiencies and further learnings from each prior phase,” with the objective of achieving the best results, said the company.
The modified construction blueprint requires an additional three months for start-up in Valleyfield and increased capital expenditures of approximately C$30 million for the completion of the structures.
The incremental expenditure for the larger processing facility along with operating system improvements will be phased in over time and are expected to be funded from operational cashflow, said the company.
The Green Organic Dutchman also noted that the Growers Circle launch “remains on schedule” with the first shipments of premium, certified organic cannabis set to be received by Canadian medical patients across the country this month.
"Not only have we addressed the important redesign requirements, we have also made significant improvements to the operating capacity and capital timing of our facilities, resulting in an additional 46,500 TGOD will split its Phase 1 into two parts with the first twelve flowering rooms representing an annual capacity of 65,000 kgs coming online in Q4 2019. Construction crews will then shift focus to phase 1b of another twelve rooms with production ramp-up in 2020 to provide annual capacity of an additional 65,000 kgs. Applying similar upgrades to phase 2 with production ramp-up in 2021 will deliver an additional capacity of 55,000 kgs. This updated plan will now provide a combined output of 185,000 kgs from Valleyfield resulting in significant additional annual revenue potential. of productive capacity," said Green Organic Dutchman CEO Brian Athaide.
"This allows us to bring additional product to both Canadian consumers and global markets. We are also excited to supply our first patients in the Growers Circle with premium organic cannabis this month, generating our first domestic revenues," he added.
The Valleyfield site
By optimizing original design and operating parameters and increasing automation, TGOD estimates it will increase productive capacity by approximately 30%, resulting in an increase of 43,000 kilograms of annual production from the total Valleyfield site.
The compnay will split its Phase 1 into two parts with the first 12 flowering rooms representing an annual capacity of 65,000 kilograms coming online in the fourth quarter of 2019. Construction crews will then shift focus to phase 1b of another 12 rooms with production ramp-up in 2020 to provide annual capacity of an additional 65,000 kilograms. Applying similar upgrades to phase 2 with production ramp-up in 2021 will deliver an additional capacity of 55,000 kilograms. The new plan will now provide a combined output of 185,000 kilograms from Valleyfield resulting in significant additional annual revenue potential.
"We have run a detailed cost-benefit analysis on Valleyfield's enhanced strategy," said Athaide. "The benefits of the additional production capacity on a phased basis are substantial and far outweigh the extension to the production schedule and additional capital cost. We will utilize our learnings from the design review and progress to date in each phase and continue to strive to achieve efficient and low-cost organic production."
The Hamilton site
The company has modified major systems from the original design in the Hamilton facility in Quebec and re-engineered the entire harvesting process to result in increased productive capacity from 14,000 kilograms to 17,500 kilograms. Vertical grow systems will be installed in vegetative rooms increasing available flowering space and product matrix variability.
"Three level vegetation gives TGOD the plant counts needed to support increased flowering space and cycles and provides flexibility in multi-strain production planning," said the company.
Headquartered in Toronto, The Green Organic Dutchman boasts operations focused on medical cannabis in Canada, Europe, the Caribbean and Latin America, as well as the Canadian recreational market.
Established by Dutch founders, the company grows organic cannabis in high-technology, eco-friendly and sustainable facilities. The cannabis is grown naturally in Canadian soil without the use of synthetic pesticides, herbicides or fertilizers and wrapped in eco-friendly packaging.
Contact Uttara Choudhury at [email protected]
-- (Updates with fresh quotes, details about the Valleyfield and Hamilton facilities)