It has been another exciting month for Invictus MD (TSXV: IMH) as the stock has risen a dramatic 33% since we last wrote about them in mid-December. Our readers who bought in when we first started covering Invictus in early November have seen their holdings rise an impressive 83%, with no end in sight.
But let’s see what catalysts drove the recent upward share price movement, and what likely future catalysts will continue to propel this green machine.
AB Labs Sales Licence Approval
As we anticipated, Invictus’ AB Labs project has received the right to sell dried marijuana under the ACMPR sales licence.
Upon the news, CEO Dan Kriznic went on to say, “This is a significant milestone for Invictus MD…We also expect to receive a sales license for Acreage Pharms within the first quarter of 2018.”
This regulatory milestone achievement led Invictus to rise from $1.65 a share to $2.79 before some profit taking led to a closing price of $2.20 a few days later. Selling pressure has subsided.
AB Labs now intends to sell its 130 kg of dried marijuana to Canopy Growth Corporation (TSX:WEED), marking their first revenue stream since inception.
All this positive news has led to some quick gains for our believers, and explains why trading volume is a whopping 50% above its long-term average.
Why We Continue to Follow Invictus: A New Letter of Intent
But the great news doesn’t end there. Invictus has entered into a Letter of Intent to increase ownership of AB Labs from 33.3% to 50%, giving it full strategic control of operations and a greater portion of production and profits.
The LOI includes a direct cash investment in AB Labs for $10 million, with the funds being used to expand existing production capacity, purchase the existing leased land and building from current landlord, and to acquire and upgrade an adjacent land and building (secondary facility), leading to a total production space of 56,000 square feet.
If the LOI is agreed upon, total estimated production capacity in ending 2018 will nearly quadruple to 26,000 kg, up from 7850 kg. This is game changing.
Invictus’ share of 2018’s production, assuming the ownership increase of AB Labs, would be 22,150 kg. At 5$ a gram, that’s a whopping $110.8 million in potential revenue in 2018 alone.
Remember, this is high quality, pesticide free product, making it very appealing to wholesalers and retailers, allowing Invictus to charge a premium.
Invictus’ market cap is around $189 million. If this Letter of Intent goes through, the company will be severely undervalued based on its annual revenue potential.
More Sales Licence Approvals Likely to Arrive
The pending sales licence application approval of the Acreage Pharms production facility is yet another near term potential catalyst for this great company. Remember, Invictus expects to receive approval in the first quarter of 2018.
We saw what the same licence approval at AB Labs did to Invictus’ share price.
With a prospective Letter of Intent and another pending sales licence approval, we can expect Invictus to continue giving investors the green light for go in a growing market.
Fortune Favours the Bold
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