Iofina invests in Colorado hemp firm Organic Vines
By Josh White
Date: Wednesday 06 Nov 2019
(Sharecast News) - Iodine and specialty chemical products manufacturer Iofina announced an investment into Organic Vines OP - a feminised hemp seed production and genetics company - on Wednesday.
The AIM-traded firm said Organic Vines had recently been incorporated with the intention of leasing and operating a "state-of-the-art" climate- and light-controlled greenhouse facility near Denver, Colorado, in order to produce high quality, feminised, organic certified hemp seeds.
It said the site included four greenhouses totalling around 240,000 square feet, capable of producing more than 50 million certified organic hemp seeds per grow cycle, which lasts approximately four months from planting to harvest.
Organic Vines was partnering with an experienced seed producer in the United States, who would be providing seedlings, advising and overseeing the growth of the crop and would be responsible for the hemp seed distribution, the board said.
It added that Organic Vines was raising $1.9m to finance one grow cycle at the site, with the harvest and seed sales expected to conclude before mid-2020.
Iofina said its subsidiary, IofinaEX, had made a $0.9m investment into Organic Vines via a non-voting equity preference share, which had a first call on returns made from the grow cycle, for up to a maximum of three times the initial investment.
Once the return had been achieved, the preference share class would dissolve, and Iofina would cease to have an investment in Organic Vines.
The investment was said to be in-line with the company's strategy to develop and integrate IofinaEX, which was focused on processing and developing products derived from hemp, such as cannabidiol (CBD).
Assuming a successful crop, the company said it was anticipating a profit on investment by the middle of 2020, totalling up to $1.8m.
Based on current seed pricing, the board said it believed that maximum return was achievable.
The investment represented a one-off opportunity, the board explained, but it did note that if it was successful, it would look to undertake further ventures with Organic Vines that would provide future benefit to Iofina, including a reliable source of quality hemp seeds for operations undertaken by IofinaEX.
"As we continue to develop our hemp [and] CBD business, we are executing strategies to advance our plans for IofinaEX," said president and chief executive officer Tom Becker.
"We anticipate this strategic investment to be the first of many steps for IofinaEX to thrive in this rapidly growing hemp market, and we look forward to updating the market on further progress in due course."
As at 1233 GMT, shares in Iofina were flat at 23p.
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