Labat Africa expands footprint with Lesotho cannabis licence purchase

16th September 2019 By: Tasneem Bulbulia - Creamer Media Reporter

Empowered JSE-listed investment holding company Labat Africa has acquired a 70% interest in the Zarenka Group for R57.5-million in shares.

Zarenka has an interest in six cannabis licences in Lesotho, which allows it to cultivate, harvest, manufacture, distribute, import and export cannabis for medical and recreational use and for any other use which is legal in the country acquiring the products.

The move is a further step in realising Labat Africa’s ambitions of growing its fully integrated cannabis business Labat Cannabis.

The acquisition of 70% in Zarenka follows a recent announcement detailing the acquisition of Knuckle Genetics, which produces cannabis seeds and genetic materials for medicinal treatments, as well as in the Pac-con pharmaceutical facility which manufactures liquids, tablets, capsules, creams and gels.

The deal with Zarenka is a crucial step forward in Labat’s cannabis strategy, it says.

The construction of the Zarenka facility in Lesotho is under way, with production set to start on November 1.

This will include, besides others, setting up containers, nurseries, offices and greenhouses, recruiting staff, appointing master growers, appointing airfreight agents and exporting the first consignment of product.

The Zarenka implementation plan is backed by an offtake commitment from an international pharmacy group and the establishment of the site in Lesotho will be funded by Zarenka.

Zarenka has offtake agreements with one of the largest European cannabis pharmacy retail outlets.

Labat said its partnership with Zarenka will raise Zarenka’s profile and improve corporate governance and transparency, which comes with being part of a publicly listed company, thus satisfying potential investors.

Meanwhile, Labat also announced on Friday that its latest tests on its Knuckle Genetics strains had yielded a 31% tetrahydrocannabinol (THC) content. It highlighted this as a “remarkably good result”, and noted that there was huge demand for strains with a THC content of above 30%.

Labat Cannabis CEO Mike Stringer confirmed that the production of cannabidiol (CBD) oils was imminent at its South African Health Products Regulatory Authority approved facility in Durban. The company expects its first run of production to be completed later this year.

According to Labat Africa CEO Brian Van Rooyen, Labat’s long-term strategy will be to further process CBD and THC oils to 100% pure CBD and THC isolate for the pharmaceutical market.

This will go hand in hand with the process of registering drug master files and pharmaceutical regulatory compliance documents in the US, Europe and Asia.

Labat will target active pharmaceutical ingredient development agreements with big pharmaceutical companies.