Shares in Khiron Life Sciences (TSXV: KHRN; OTCQB: KHRNF) have soared after it announced plans to drastically increase its footprint in Latin America.
Last week it tied up a $13.7 million deal to purchase Uruguayan cannabis producer Cannapur. It signed a letter of intent to acquire 100% of NettaGrowth International Inc., an arm’s length company that will own Dormul S.A., which trades as Cannapur, issuing 8,498,821 common shares at $1.61 per common share to get the deal done.
It has also just announced a joint venture with Dixie Brands (CSE: DIXI.U) to launch a range of cannabis derivatives to the Latin American market. Dixie will also manufacture and distribute Khiron’s Kuida brand of CBD-based cosmetics in the U.S., targeting its growing Hispanic population.
Khiron’s share price has climbed 48.7% in the past six days, rising from C$1.58 to C$2.35 thanks to its expansion drive.
The joint venture with Dixie will be based in Bogota, Colombia. Khiron will handle cultivation, manufacturing and distribution, while Dixie will contribute intellectual property that includes an extensive branded portfolio. The two companies will work together to create new cannabis-based products suitable for the Latin American market.
The idea is to combine Dixie’s broad portfolio with Khiron’s established distribution network to gain ‘first-mover advantage’ in the region. Dixie president and chief executive Chuck Smith said Khiron is the clear leader in the South American cannabis arena and he pledged to “aggressively” support the push to grow sales on the continent.
Dormul has secured a medicinal cultivation and commercialization licence for Uruguay, with a cultivation capacity of up to 120 tonnes and 170,000 plants, and Khiron will control that via Nettagrowth. It will also gain access to an export market of 75 million people in southern Brazil through the Mercosur Regional Free Trade Bloc agreement.
Canadian entrepreneur Joseph Mimran and equity investor Michael Beck will join the board of Khiron’s Colombian subsidiary to provide strategic support once the Nettagrowth deal goes through.
Former Mexican president Vicente Fox is also bidding to cash in on the burgeoning South American cannabis industry thanks to his role at the rapidly expanding Khiron. Fox, who served as president from 2000 to 2006, joined as a board member and advisor in 2018.
At a press conference in Colombia he said the “paradigm has totally changed” for cannabis in Latin America” as governments embrace something that was once in the “hands of the underworld”. It mirrors the role of former Israeli Prime Minister Ehud Barak, who serves as chairman at InterCure and has seen his holding in the company skyrocket as the market in Israel opens up.
Khiron already has operations in Chile, along with Colombia, and it continues to expand across the region.