Wholly-owned subsidiaries of Youngevity International (YGYI) - CLR Roasters and Khrysos Industries (the US Partners) - have signed a deal with H&H Coffee Group Export Corp and The Nica Hemp Cooperative (the Nicaragua Partners) to take over the 2,200 acre Chaguitillo Farms in Sebaco-Matagalpa, Nicaragua. The area will have buildings for extraction drying.
Plans provide for all electricity and a 15,000 AMP electrical service to be delivered to the property and 45,000 Square feet of buildings to be erected for extraction drying and storage, and for greenhouse space to be added to the property.Wholly-owned subsidiaries of Youngevity International (YGYI) - CLR Roasters and Khrysos Industries (the US Partners) - have signed a deal with H&H Coffee Group Export Corp and The Nica Hemp Cooperative (the Nicaragua Partners) to take over the 2,200 acre Chaguitillo Farms in Sebaco-Matagalpa, Nicaragua. The area will have buildings for extraction drying.#
The total estimated cost for the land and improvements is approximately $30,000,000 dollars, with H&H contributing the 2,200 acre farm with an estimated value of approximately $10 million, and all the capital toward the construction of the project will be provided by The Nica Hemp Cooperative, estimated at $20 million dollars.
The US Partners will initially contribute $3,000,000 of extraction equipment to the project along with its expertise in the hemp business. Additionally, subject to Nasdaq approval, the US Partners intend to issue 1.5 million shares of YGYI common stock to the Nica Hemp Cooperative in exchange for a 50 per cent stake in the land and the improvements (having a $30,000,000 estimated value at completion) and will also issue 5 million warrants with a strike price $1.50 per share to the Nica Hemp Cooperative and the US Partners will receive a 75 per cent controlling stake in the hemp grow and oil extraction business.
The warrants will be issued when the project is completed and commences its operations
The project provides for complete preparation of the 2,200 acres. However, the initial pilot programme planting will be for approximately 200 acres with an expected production of 400,000 lbs of hemp bio mass on the initial acreage, which is estimated to convert to 13,000 litres of winterised crude oil which, at current market prices has the potential to generate $6.4 million in gross revenue. The group anticipates growing 400 acres in year 2, 800 acres in year 3, and 2,200 acres in 2023.
Fully planted the projection for hemp yield in pounds is approximately 4.4 million pounds per year, which is estimated to convert to 129,000 litres of winterised crude oil, which at current market prices has the potential to generate approximately $64 million in gross revenue. All estimates are assuming only 1 annual crop yield, however, the weather in Nicaragua may be conducive to multiple harvests annually.
"This is a very impressive partnership and collaboration between our Hemp Enterprise, our Coffee Enterprise and our very strong and growing strategic business relationship in Nicaragua. We feel that the value of YGYI's 50 per cent interest in the land and infrastructure at completion of the project along with the assumption that the warrants will be exercised represents a significant premium to our current trading price," said Dave Briskie, president and CFO of Youngevity.
"Our team at Khrysos is honoured to be supporting this Nicaraguan Hemp Initiative. It's always a great thing when projects of this magnitude can come together and benefit all parties in a significant way. This should create expanding markets and job opportunities in both Nicaragua and the US," said Dwayne Dundore, president of Khrysos.
ALCHEMPro News Desk (SV)
marketing@alchempro.com
