Gina Rinehart punts $15 million on cannabis stock
Australia’s richest woman has made her first foray into the medicinal marijuana sector with a multimillion-dollar investment.
Gina Rinehart’s Hancock Prospecting will pump $15m into a Perth-based medicinal marijuana company, in what will be her first foray into the sector.
The iron ore billionaire’s surprise investment in Perth-based Little Green Pharma, which will see her company Hancock Prospecting emerge with just over a 10 per cent stake in the company, is an extension of her longstanding support for cancer sufferers.
Hancock’s general manager of business development Dan Wade said in a statement that the company believed in the potential medicinal benefits of cannabis.
“In supporting the company’s investment in its new facility and becoming a substantial shareholder, we hope to help many thousands of Australian and overseas patients access much-needed cannabis medicines,” Mr Wade said.
“We believe medicinal cannabis has a vital role in helping to treat a range of chronic conditions, and we’re pleased to support an Australian medicinal cannabis company in LGP that continues to put patients first and contribute to the development of this helpful and emerging industry.”
Medicinal cannabis has been found to assist in relieving some side effects of chemotherapy, as well as in palliative care.
Hancock’s investment will help fund Little Green Pharma’s $C20m ($21.5m) acquisition of an established medicinal marijuana facility in the European nation of Denmark. The company already owns a cultivation facility in Western Australia’s south west.
The Denmark facility can produce up to 20 tonnes of biomass a year, including 12 tonnes of dried cannabis flower.
Little Green Pharma’s managing director Fleta Solomon said the transaction was a step-change for the company, with the acquisition cost well below the cost of building the same capacity in Australia.
“We have been speaking for some time about the need to increase our production capacity and the Denmark facility not only gives us the cultivation and manufacturing capacity we need but does so immediately. We won’t be constrained by the two-year build and permitting time required to expand our existing West Australian Facility,” she said.
“We are well positioned in the market to capitalise on the brand equity LGP has built in Europe and Australia, with the Denmark Facility providing immediate access to medical grade product at volumes that will allow us the opportunity to accelerate our growth strategy.”
While the vast majority of Mrs Rinehart’s wealth is derived from the mining industry, she has long been a significant investor in agriculture.
Mrs Rinehart’s wealth was estimated at $36.28bn in the most recent edition of The Australian’s The List, her fortune having swollen off the back of soaring iron ore prices. Hancock will pay 60c for each of its shares in the company.
Little Green Pharma shares jumped more than 10 per cent to 72c on the back of the news.
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