International Goldfields jettisons mining for Uruguay cannabis

International Goldfields jettisons mining for Uruguay cannabis

Monday, May 11, 2015 by Proactive Investors

The acquisition of the Uruguay company will propel International Goldfields down the cannabis products road

The acquisition of the Uruguay company will propel International Goldfields down the cannabis products road

International Goldfields (ASX:IGS) is firmly on the road to gaining a dominant position in the legal cannabis market of Uruguay with a binding agreement to acquire an 85% interest in local Winter Garden Biosciences.

Uruguay recently became the first nation in the world to fully legalise under its federal regulatory system the research & development, as well as cultivation, distribution, sale and consumption of non-synthetic cannabinoids and hemp.

IGS will transform from a miner to a cannabis supplier with a reverse takeover by Winter Garden completed within seven weeks upon receipt of all approvals.

Winter Garden, a private biosciences and pharmaceutical company in Uruguay is the subject of a binding heads of agreement with IGS.

By producing “hemp” rather than “marijuana”, Winter Garden will look to produce a high volume of Cannabidiol (CBD) rich extracts which are in high demand in legal marijuana markets given the compound’s ability to target specific illnesses and medical conditions.

Hemp is a variety of cannabis which has been developed for industrial applications and large-scale farming, traditionally for fibres and seeds.

IGS will pay a A$325,000 deposit to Winter Garden, 50% as an option fee and 50% as a six month interest free unsecured loan.

The agreement is subject to shareholder approval and a number of conditions including completion of due diligence.

IGS will then issue 1,500,000,000 shares to Winter Garden at a price of $0.005 per share or $7.5 million for the 85% interest.

Upon completion of the transaction, IGS will have an issued capital of 2,741,358,484 and 337,617,307 options.

The capital structure post compliance with Chapter 1 and 2 is still to be determined based on the disposal process of 9.3 million shares held by IGS in Santa Fe Gold Inc. (OTC:SFEG), USD4m loan owing from Sante Fe and relevant consolidation if required.

Cape Lambert Resources (ASX:CFE) is the largest shareholder in IGS with a 24.7% stake.

IGS will complete the liquidation of some or all the securities held in of listed securities with a current market value of approx. A$1.8 million.

Indicative Timetable

The company has set an indicative date of 17 July 2015 for completion of approvals and execution of the agreement.

Product focus

Initial focus is on two distinct product lines for both humans and animals:

Neurological Pain / Neurodegeneration / Palsy

– Anti-Tumor / Anti-Metastatic
– Anti-Inflammation
– Anti-Nausea
– Anti-Depression/PTSD

Delivery Systems

The company is designing delivery systems ranging from low tech (i.e. the marijuana edible) to high tech, pharmaceutical applications.

Winter Garden’s team has made significant strides utilizing micro encapsulation and emulsion technology to commercialise a cutaneous delivery system, similar to a Nicotine patch that will provide slow-release, controlled dosing of cannabinoids that are discrete and odourless

Background

Winter Garden is a developer of mass market non-synthetic cannabis products and focused on the production of cannabis extracts, derivatives, delivery systems for sale into the fast growing international marketplace for medicinal cannabis products.

Uruguay recently became the first country in the world to fully legalise under federal law the research, cultivation,
distribution, sale and consumption of non-synthetic cannabinoids and hemp products.

Under Uruguayan law Winter Garden is currently the only company that:

– can perform invivo, invitro, clinical and phase 3 clinical trials as well as patent the resulting products in a matter of months;
– is permitted to register and patent its entire product line (including plant varieties, extraction methods and delivery systems) to create a fully licensable and patent protected product lines;
– can patent Process IP, Formulation IP, Tech IP, Pharma IP, Nutritional model IP Strain IP, Extraction IP, Extract IP and Delivery System IP in a timeframe and at a cost significantly less than competitors;
– can scale-up production of its extract, derivative and delivery products in its private laboratory, greenhouse and farm, including its vacant seed process facility, within months;
– has licences that allow for the import and export of cannabinoid products.

Facility

Winter Garden’s headquarters are based at a production and research facility in Uruguay. The facility is located in the Polo Tecnológico – PCTP (Tech Zone) and is the only private laboratory in Uruguay registered for full-spectrum cannabis analysis and research.

The facility is fully equipped to develop pharmacological products, nutritional products and nanotechnology-based products in agreement with Polo Tecnológico – PCTP (Tech Zone) of the Chemical School (National University – UDELAR), Facultad de Ciencias (Science School) (National University – UDELAR).

The Facility includes a farm expandable to 1,000 acres with three growing seasons annually and year round sunlight, a 5,400 square feet. greenhouse for seeding cultivation and a laboratory & factory for manufacturing.

Winter Garden has the only hemp farm with seeds, and a research platform to export a standardised product with qualitative and quantitative metrics tailored to global market demand.

David Tasker, IGS director said, “This agreement will create an opportunity for IGS shareholders to realise value from one of the fastest growing pharma industries in the world – medical and therapeutic cannabis.

“Winter Garden will rapidly advance these next generation products which are designed to target specifically the symptoms in many major areas of critical care and human illness.”

Julian Strauss, Winter Garden MD said:

“The unique combination of our experienced team, our world-class facilities, the support of the Uruguayan regime, as well as our global relationships should enable us to bring these important products to market in record time at a very favourable cost, well ahead of competitors, and patented from start to finish to protect our shareholders and stakeholders.”

Strauss obtained a Medical Marihuana License and a Marihuana Producing License from the government of Canada in 2007 and 2006 respectively.

Other agreement conditions

a) IGS receiving a letter from the ASX confirming that the ASX will re-admit IGS to the official list of the ASX, subject to the satisfaction of certain conditions set out in the letter, on terms acceptable to IGS and the Winter Garden;

b) each Winter Garden shareholder entering into a formal share sale agreement with IGS (Formal Agreement) incorporating customary warranties and other terms and conditions;

c) IGS raising a minimum of $1,000,000 through the issue of IGS Shares at a price to be determined by IGS and Winter Garden Capital Raising, with a minimum net proceeds to IGS of $1,000,000 at closing incorporating the capital raising and / or the sale of some of the other assets of the Company (9.2m Sante Fe Gold Inc. shares, US$4 million loan owing from Sante Fe);

d) IGS conducting a share consolidation in accordance with the Corporations Act at a ratio the Parties consider reasonably necessary to allow the IGS to successfully complete the Capital Raising and ASX Re-Admission criteria;

e) the Parties obtaining all shareholder, statutory and regulatory approvals necessary to undertake the Acquisition or that are reasonably required by IGS;

f) the Parties obtaining, in a form reasonably satisfactory to the IGS, all third party consents or waivers which are, in the opinion of the IGS, necessary or desirable to complete the Acquisition;

g) the Vendors entering into restriction agreements in relation to the Consideration Shares to the extent required under Chapter 9 of the ASX Listing Rules if applicable.

Analysis

The agreement and timetable provides IGS shareholders with a path toward medium to long term value accretion with the acquisition of a dominant player in Uruguay in a growth market of cannabis related products supplied to patients for a number of medical conditions.

For IGS, sitting with a market cap. of circa $2.58m there is significant upside given forecast growth in cannabis markets. Winter Garden is also able to operate in a country (Uruguay) where cannabis is legalised at a federal level and has first mover advantage.

 

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