Aurora insists local facility will finish as needed

By COLLIN GALLANT on November 17, 2019.

cgallant@medicinehatnews.com@CollinGallant

The day after Aurora Cannabis announced it would reel-in an aggressive expansion plan, including a delay for its massive facility in Medicine Hat, the company is walking back the impression that the Aurora Sun project is on hold.

The Edmonton-based cannabis producer released a new strategic plan on Thursday with its quarterly financial results.

Along with a new financing management plan amid disappointing recreational sales totals, the company said it would rein in capital spending, specifically by stopping work at a facility in Denmark and slowing work in Medicine Hat.

“Aurora Sun remains an important part of our future outlook for the production of high-quality cannabis,” said communications vice-president Michelle Lefler in a statement on Friday. “There has been no halt to construction at the facility. We are continuing to build with adjusted timelines that are more closely aligned with how cannabis markets develop.”

The massive facility was always scheduled to be completed in stages, and now the company says about 238,000 square feet of the greenhouse could be operational in 2020, compared to initial plans to fully commission the 1.6 million square-foot greenhouse next year.

That could save the company US$110 million in the short term in its capital expenditure budget, but officials insist the remaining 1.3 million square feet will be done in stages as demand warrants.

“Additional operations at the facility will be activated as global demand develops, with a target date for full operations in 2021,” said Lefler. “Previously, we had intended to build at an accelerated speed. This is a more normalized pace for a project of this size and is aligned with how markets are growing.”

Final job numbers, said to be in the range of 450 initially, shouldn’t be affected, she added.

Aurora’s senior management told a conference call with investment houses on Thursday night, that the company’s facilities, like Sun in Medicine Hat and the already operating Sky facility in Leduc, provided low-cost, high-quality production that would help it succeed in the long term.

“We’ve got a sound plan, and a sound decision to reduce (capital spending) due to global demand, and we can turn that back on in a heart beat,” said CEO Terry Booth.

“We de-risked the process of method of growing by having these purpose-built facilities. We can’t say enough how proud we are of the teams that have assembled these, and we will become an employer of choice and partner of choice globally.”

Chief operating officer Cam Battely said that while the consumer market revenue is lower than expected, medical sales and other factors are positive, and Aurora’s strategy would allow the company to thrive in the long term of what’s been a rapidly growing industry.

“A lot of capacity has come onto the system and I’m not sure how much of it is going to stay,” said Battley.

“There are producers out there that are not economic right now and they will never be economic because they don’t have the ability to produce cannabis at low cost.”

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