AN UNMATCHED PLATFORM FOR THE GLOBAL CANNABIS OPPORTUNITY - InvestorPresentation November2018 - Village Farms
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Investor Presentation November 2018
AN UNMATCHED PLATFORM FOR THE
GLOBAL CANNABIS OPPORTUNITY
1
Forward Looking Statements
This presentation contains certain "forward looking statements". These statements relate to future events or
future performance and reflect the Company's expectations regarding its growth, results of operations,
performance, business prospects, opportunities or industry performance and trends. These forward looking
statements reflect the Company's current internal projections, expectations or beliefs and are based on
information currently available to the Company. In some cases, forward looking statements can be identified by
terminology such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict" ,
"potential", "continue" or the negative of these terms or other comparable terminology. A number of factors
could cause actual events or results to differ materially from the results discussed in the forward looking
statements. In evaluating these statements, you should specifically consider various factors, including, but not
limited to, such risks and uncertainties as availability of resource, competitive pressures and changes in market
activity, risks associated with U.S. and Canadian sales and foreign exchange, regulatory requirements and all of
the other "Risk Factors" set out in the Company's current annual information form for the year ended
December 31, 2017 and the most recent management's discussion and analysis for the quarter ended
September 30, 2018, which is available electronically at www.sedar.com. Actual results may differ materially
from any forward looking statement. Although the Company believes that the forward looking statements
contained in this presentation are based upon reasonable assumptions, you cannot be assured that actual
results will be consistent with these forward looking statements. These forward looking statements are made
as of the date of this presentation, and other than as specifically required by applicable law, the Company
assumes no obligation to update or revise them to reflect new events or circumstances.
2
Market Facts 3
(As of November 23, 2018)
MANAGEMENT
LISTING MARKET SHARES 52-WEEK
PRICE & BOARD
SYMBOL CAPITALIZATION OUTSTANDING HIGH/LOW
OWNERSHIP
TSX:VFF C$5.64 ~ C$268 M 47.6 M C$9.80 ~22%
OTCQX: (basic) (basic)
VFFIF
~ C$289 M 51.2 M C$4.36
(diluted) (diluted)
Listed on the TSX since 2006
Very strong alignment of management and shareholders 3
Canadian Legal Cannabis: $4B+ in 20191 US Legal Cannabis: Global Hemp CBD: $25B by 20252 $22B by 20224 Global Legal Cannabis: $146B+ by 20253 1. Deloitte 3. Grand View Research 2. New Frontier Data 4. Brightfield Group 4
Unmatched North America Greenhouse Assets 5
Owned Assets
10.5 M sq. ft. of technologically
advanced facilities
(240 acres)
Canada: Delta, BC
3 Facilities
4.8 M sq. ft. (110 acres)
1 Cannabis (1.1 M sq. ft)
2 Vegetables (3.7 M sq. ft.)
U.S.: West Texas
4 Facilities - Vegetables
5.7 M sq. ft. (130 acres)
Growing Partners
Mexico: 1.5 M sq. ft. (35 acres)
Ontario: 3.0 M sq. ft. (70 acres)
BC: 3.0 M sq. ft. (70 acres) 5
Leaders in High-Tech, Low-Cost Vertically Integrated Greenhouse Growing 6
Experts
in agricultural product safety
750 years
of combined master grower
experience from around the world
Decades of experience as a
Leaders vertically integrated grower/distributor
in crop management
registrations in North America
30-year
history developing and operating Proven
mega-scale greenhouses track record as a
low-cost operator
Cannabis is an agricultural product like any other
6
Fast Mover Advantage: Ability to Rapidly Transition to New Crops with Low Risk 7
Existing facilities require lower cap ex and allow
faster time to market compared to new builds
Existing operations with experienced management,
skilled labour force
Proven operating systems and decades of
experience managing the local climate
Extensive in-house facilities development and
conversion expertise
7
Canada
On Track to be One of the
Largest Vertically Integrated Producers
8
Canada: On Track to be One of the Largest Vertically Integrated Producers 9
(50% Owned Joint Venture)
PSF: 1.1 M sq. ft.
conservative projected yield of
75,000 kg
D1 & D2: Options on an additional
3.7 M sq. ft.
conservative projected yield of
300,000 kg
Pure Sunfarms has the potential address nearly half of forecasted Canadian market
9
Creating One of Canada’s Largest Vertically Integrated Cannabis Companies 10
Well positioned for the evolution of the Canadian cannabis market
Immediate Term: Next Step:
Capitalize on wholesale opportunity Vertically integrated supplier with a leading
brand and reputation
▪ Wholesale distribution agreement with Canadian LP for ▪ Appointed President and CEO, Mandesh Dosanjh
40% of 2018/2019 production ▪ Joined from LCBO: SVP, Supply Chain & Wholesale
▪ Developed/managed LCBO’s supply chain/ wholesale strategy for
legalization of adult-use cannabis
▪ Supply shortage: Realizing very favourable spot market ▪ Developing product and brand strategy
pricing ▪ Extraction capabilities in place by mid-2019
▪ In advanced discussions for supply agreements with
▪ Strong demand from other Licensed Producers provincial government distributors
Committed to building a reputation for quality, consistency and reliability
10Capital Efficient, Rapid Conversion of Existing Produce Operation 11
Fully automated, high-capacity nursery,
16 state-of-the-art flower rooms
Meticulous attention to the growing environment and
systems, processing areas and production ramp up
Growing system with automation proven in different
crops to provide optimal efficiencies
Industry-leading HVAC systems based on extensive
climate management experience, with technically
advanced data systems
High-tech light deprivation/supplementation systems
Configured for continuous weekly harvesting year round
11GOAL: Be the Low-Cost, High-Quality Cannabis Producer in Canada 12
Ingrained culture of high-quality,
low-cost production built over decades
conservative
target of
Greenhouse growing provides significant capital
and operating cost efficienciesRapid Transition to Production and Sale 13
Initiate File Cultivation Commence Obtain Complete Commence Obtain Commence
Cultivation License Conversion of Cultivation Conversion of Commercial- Selling Sales
License Process Application Delta 3 to License Full 250,000 ft2 Scale Production License
Cannabis (Quadrant 1)
Licensing of Delta 3
Standards
✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
June 2017 Sept 2017 Oct 2017 March 2018 April 2018 May 2018 July 2018 Sept 2018
Pure Sunfarms has consistently achieved key milestones on or ahead of schedule
13Rapid Ramp to Large-Scale Commercial Production 14
Targeted Production Area Ramp Up Targeted Annual Production
August 2018 Q1 2019
2018
1.1 M sq. ft.1
7,000 – 8,000 kg
October:
550,000 sq. ft. in
production 2019
775,000 sq. ft.
✓ 46,000 – 52,000 kg
550,000 sq. ft.
✓ 2020
225,000 sq. ft.
75,000 kg
1. Conversion of 1.1 M sq. ft. completed. Production in Quadrant 1 temporarily suspended
from October to March for installation of supplemental lighting.
14Production Ramping Very Well at Scale 15
Facility operating as intended – benefitting from
20 years of site-specific experience, existing
operational/growing team and existing labour force
Quality and consistency firmly in line with expectations
Yield consistent with production targets
Production to date validating low-cost assumptions
Nursery capable of supplying production well in excess
of Delta 3 requirements
On track to achieve or exceed all production expectations/forecasts
15Positioned to be a Leading Large-Scale Supplier in Canada 16
Currently one of the largest On track to be a top-ten Potential to be a
production capacities producer at full production top-three producer
Existing and Announced Future Capacity of Top 10 Public LPs by Funded Future Capacity
570,000
Existing Capacity (kg) Future Capacity (kg)
339,250
300,000
260,500
148,000
113,000
90,000 88,000 87,000 65,000 57,300
Wayland
Pure Group
Sunfarms
At Nov. 23/18
Expect to reach run-rate full production of 75,000 kg in Q2 2019
16U.S. & Beyond
Uniquely Positioned for Both Near-Term
& Longer-Term Opportunities
17Massive U.S. Opportunity Independent of Canadian JV 18
5.7M sq. ft. – Existing, state-of-the-art, mega-scale produce operations in best growing climate
in U.S. (5,000 ft. elevation, most sunlight in US)
U.S. assets are NOT PART of Canadian
cannabis joint venture
20+ year operating history and >600 employees
Can be rapidly converted to hemp or cannabis
Will benefit from cannabis experience in Canada
Significant U.S. opportunities are a free option
18Significant Near-Term U.S. Hemp Opportunity 19 Hemp Farming Bill 2018: Will See Hemp Removed from Federal Controlled Substances Act and Cultivation of Hemp Federally Legalized Industrial Hemp: Cannabis plant with
Compelling Valuation on De-Risked Scale Up 20
Comparative Value: 2020 Planned Production Capacity
Top 10 LPs
(planned 2020 production2)
~199,310 kg Planned Production 37,500 kg 150,000 kg
average 50% of Pure Sunfarms production 50% of Pure Sunfarms production
(1.1 M square feet) (4.8 million square feet)
~$5,594 M Market Cap1 ~$289 M ~$289 M
average
Market Cap/Gram
~$28.00 of Planned Production
~$7.70 ~$1.93
average
1. Fully diluted. At Nov. 23, 2018. 2. WEED, ACB, APH, TRST, OGI, TLRY, TGOD, XLY, WAYL, VIVO.
PLUS underlying produce business PLUS U.S./Mexico opportunities
20Investment Summary 21 Uniquely Positioned for Multiple Large-Scale Opportunities ▪ Unmatched platform with proven ability to move quickly into new high-value crops ▪ Canada: Pure Sunfarms is firmly on track to be one of the largest cannabis producers with capability to be the low-cost, high-quality producer ▪ U.S.: Own one of the very largest greenhouse footprints (independent of Canadian JV) to capitalize on hemp and cannabis opportunities ▪ Mexico: Strong existing partnerships with large-scale growers to pursue cannabis opportunities ▪ Well aligned management team – 19.9% owned by founder and CEO ▪ Compelling valuation on Canadian cannabis business alone – PLUS underlying produce business PLUS US/international hemp and cannabis opportunities 21
Investor Presentation November 2018
AN UNMATCHED PLATFORM FOR THE
GLOBAL CANNABIS OPPORTUNITY
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