Cronos Picks Up Another $10 Million For Expansion

Cronos Group Inc. (PRMCF) announced a private placement for $10 million at a price of $2.25. The proceeds will be used to fund the continued expansion of the company’s production capacity.

Canaccord Genuity analyst Matt Bottomley thinks Cronos Group is still undervalued. “We believe securing additional capacity to supply international markets provides attractive optionality for the company as medical cannabis continues to gain global acceptance; however, we have not updated our estimates for the time being as we await additional updates on Israel’s timing for allowing export sales and construction/expansion benchmarks, as the JV continues to build capacity,” Bottomley said..

There has been a lot happening with Cronos lately. Just a couple of days ago the company also announced that it was the first company to be admitted into the Nasdaq International Designation program using its OTC symbol PRMCF. It’s a platform designed for non-U.S. companies.

“We’ve always had a strong U.S. investor base and that investor base continues to grow. This designation will improve Cronos’ visibility across U.S. capital markets and increase shareholder confidence and liquidity,” said Mike Gorenstein, CEO of Cronos. Having said that, member companies are not listed or traded on the Nasdaq as a result of the designation.

Cronos Group Inc. (PRMCF), just recently delivered its second quarter results. Sales increased 25% sequentially with Cronos reporting $643,000 in revenue over last quarter’s $514,000. The company recorded positive net income of $174,879. The cost of goods sold dropped to $2.18 per gram and management said it expected the costs to continue to decline as two additional facilities ramp up production.

In August Cronos said it had secured $40 million in debt financing with Romspen Investment Corporation to continue expansion of its New Peace Facility. Those plans were outlined in May of this year.

Cronos OTC stock is lately trading at $1.90, which is lower than its 52-week high of $2.65, but has recovered nicely from its 52-week low of 29 cents. The stock’s performance on the Canadian market where it trades under the ticker MJN has experienced an increase of 286% over the past year.  The 52-week range has been 1.58-3.54 in Canadian dollars.

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