Vancouver, British Columbia--(Newsfile Corp. - February 14, 2018) - Today's buy recommendation comes from Fundamental Research Corp. Analyst Sid Rajeev gives Alliance Growers (CSE: ACG) a highly speculative buy rating and a fair value estimate of $0.88 per share, a premium of 52% to the $0.58 closing price on February 8th, the day the report was issued. This is a significant upgrade from Fundamental's first recommendation on September 27, 2017, when Alliance was given a $0.30 target, when trading at just $0.10.
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On December 28, 2017, Alliance entered into a binding Letter of Intent with WFS Pharmagreen Inc. to acquire an equity stake in Pharmagreen's subsidiary, BC New Co., which will be the builder and operator of the proposed Cannabis Botany Centre.
Analyst Sid Rajeev stated: "We view this LOI as a significant development for the company. In our initiating report, we identified the lack of binding documentation as a major risk/ flaw in Alliance's ability to execute their business plan. However, the binding LOI, which we believe will be followed up with a Definitive Agreement in the near future, signifies a material development of the cannabis botany centre."
Pharmagreen is Alliance's partner in the cannabis Botany Centre, through which Alliance has access to Botanical Research in Motion's (B.R.I.M) superior tissue culture technology. B.R.I.M is a related party of Pharmagreen, who will retain majority ownership of the cannabis botany centre. B.R.I.M's proprietary "Chibafreen Invitro Plant Production System" has the potential to mass-produce genetically superior uniform quality cannabis plantlets for wholesale and retail customers. The company also expects that the botany centre will facilitate Testing Lab services, allowing Alliance to provide DNA tests for other growers in the cannabis space.
Pharmagreen has purchased the land, located east of Mission, British Columbia, upon which the proposed cannabis botany centre will be built, and intends for the land to be leased to BC New Co.
On January 2, 2018, the company announced that it had entered into an exclusive agreement to acquire Biocannatech, a late-stage ACMPR applicant based in Quebec. Quebec, relative to Ontario and British Columbia, has relatively few issued ACMPR-licensed producers, with only six to date. This represents only 7% of all issued ACMPR licenses, despite over 20% of Canada's population living within the province.
The acquisition of Biocannatech calls for Alliance to finance the buildout and completion of the Biocannatech facility in accordance with ACMPR regulations. Alliance and Biocannatech will prepare the facility for required inspection by Health Canada, who upon satisfaction with the proposed facility's successful first crop, are expected to grant a cultivation license.
Note that under Health Canada's proposed regulations, growers who intend to cultivate, and sell cannabis
seeds, and/ or clones (plantlets), may potentially apply for a nursery license. However, these regulations are still dependent on a final decision by Health Canada.
The acquisition expands Alliance's portfolio of cannabis cultivator investments, the other notable position
being Canwe Growers, a late-stage ACMPR applicant based in Ontario.
The shares are trading at $0.58, well below Fundamental's fair value price of $0.88.
For more information please visit the company's website www.alliancegrowers.com, contact Dennis Petke, President and CEO, at 778-331-4266, or email [email protected].
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