Analysts' Ideas of the Week - Expecting 50% of the U.S. Population to be Fully Vaccinated by August - Baystreet.ca
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Analysts' Ideas of the Week Expecting 50% of the U.S. Population to be Fully Vaccinated by August February 16, 2021 www.researchfrc.com
Page 2 Reddit Sentiment Tracker Over the last 24 hours, the four most discussed sectors on Reddit were Cannabis, Electric Vehicles, Cryptocurrencies, and Betting. Based on our review, we believe electric vehicle related stocks are likely to be the biggest movers this week. Based on our analysis of the data, we believe TSLA, AAPL, and GM look well positioned. February 16, 2021 Company Ticker Sector Reddit Score % change (2d) YTD 1-Week 1-Year General Motors Co. GM Auto Manufacturers 64.29% 155% -5% 55% Apple Inc. AAPL Consumer Electronics 64.29% 2% -3% 65% Tesla TSLA Auto Manufacturers 46.07% 8% -7% 364% AVERAGE 78% -4% 60% MIN 2% -5% 55% MAX 155% -3% 65% Indexes YTD 1-Week 1-Year S&P 500 5% 1% 16% Source: FRC FRC Top Picks The following table shows last week’s top five performers among our Top Picks, including two cannabis, one technology, and two junior resource companies. Inner Spirit Holdings (CSE: ISH) was up 44% WoW, and was the top performer. Additional comments on ISH are presented later in this report. Top Five Performers Last Week Source: FRC Our top picks were up 83% (on average) since the initiation of coverage vs the benchmark’s (TSXV) 21%. ©2021 Fundamental Research Corp. “17+ Years of Bringing Undiscovered Investment Opportunities to the Forefront” Click here to view FRC’s complete list of top picks PLEASE READ THE IMPORTANT DISCLOSURES AT THE BACK OF THIS REPORT
Page 3 Source: FRC Performance by Sector Source: FRC Our complete list of top picks (updated weekly) can be viewed here. Weekly Mining Commentary Global equity markets continued to rally due to a decline in new cases of COVID-19 in almost all of the hardest hit nations, and continued vaccine rollout. All the seven indices we track reported gains (orange bars). ©2021 Fundamental Research Corp. “17+ Years of Bringing Undiscovered Investment Opportunities to the Forefront” Click here to view FRC’s complete list of top picks PLEASE READ THE IMPORTANT DISCLOSURES AT THE BACK OF THIS REPORT
Page 4 Source: FRC / Various For the first time, almost all of the hardest hit nations experienced a decline in daily new cases of COVID-19. Source: https://www.worldometers.info/coronavirus/ ©2021 Fundamental Research Corp. “17+ Years of Bringing Undiscovered Investment Opportunities to the Forefront” Click here to view FRC’s complete list of top picks PLEASE READ THE IMPORTANT DISCLOSURES AT THE BACK OF THIS REPORT
Page 5 11.5% of the U.S. population has received vaccinations vs 9.4% at the same time last week. This compares to 22.5% in the U.K. (up from 17.7%). Israel is at 46%, up from 40%. The U.S. is currently administering over 1.8M doses per day, up from 1.4M in the prior week. We estimate that 50% of the population will be vaccinated by August 2021 vs our previous estimate of October. Base metals continued to gain strength based on the above-mentioned factors. Gold prices were down 1.4%, and is the weakest performer (on a YoY basis) among the mainstream metals. Gold prices typically fall when there is a decline in global economic uncertainties. We expect prices to strengthen in H2-2021, as inflation kicks in from a global economic recovery. ©2021 Fundamental Research Corp. “17+ Years of Bringing Undiscovered Investment Opportunities to the Forefront” Click here to view FRC’s complete list of top picks PLEASE READ THE IMPORTANT DISCLOSURES AT THE BACK OF THIS REPORT
Page 6 Inventory levels of base metals remained flat on the LME, but increased on the SHFE (Shanghai), providing us mixed signals. Not surprisingly, valuations of gold producers were down 6%, while that of base metals producers were up 2% last week. ©2021 Fundamental Research Corp. “17+ Years of Bringing Undiscovered Investment Opportunities to the Forefront” Click here to view FRC’s complete list of top picks PLEASE READ THE IMPORTANT DISCLOSURES AT THE BACK OF THIS REPORT
Page 7 We are not making any changes to our price forecasts, but are reviewing our 2021 projections for base metals based on their continued strength. ©2021 Fundamental Research Corp. “17+ Years of Bringing Undiscovered Investment Opportunities to the Forefront” Click here to view FRC’s complete list of top picks PLEASE READ THE IMPORTANT DISCLOSURES AT THE BACK OF THIS REPORT
Page 8 In the following section, we review companies that announced key developments in the past week. The table below summarizes the changes we made in ratings/fair value estimates/EPS projections of companies under coverage in this report: ©2021 Fundamental Research Corp. “17+ Years of Bringing Undiscovered Investment Opportunities to the Forefront” Click here to view FRC’s complete list of top picks PLEASE READ THE IMPORTANT DISCLOSURES AT THE BACK OF THIS REPORT
Page 9 Mining / Exploration Company Ticker Current Share FRC Fair Value Date of PR: Name: Symbol Price: Estimate: American TSXV: AMY $2.58 N/A Feb 11, 2021 Manganese Inc. PR Content FRC Opinion Attracted a former Director of Tesla for Positive – AMY’s share price is up 77% in Central Europe (NASDAQ: TSLA) to join one week, and 465% in one month. We its advisory board. In addition, leach tests were very pleased with the test results as on samples collected from the U.S. AMY has significantly increased its chances National Defense stockpile returned of obtaining commercial contracts from the manganese recovery rates of up to 99%. U.S. government, and/or battery manufacturers. In addition, attracting a former member of Tesla is a major vote of confidence on the company’s technology. Our previous fair value estimate was based on a 6 tpd plant. As a result of the recent developments, we believe the company will look to build out a larger scale plant. We are temporarily retracting our fair value estimate, and will update our estimate once we have a conversation with management, and get a better understanding of the technology’s scalability. Company Ticker Current Share FRC Fair Value Date of PR: Name: Symbol Price: Estimate: Gran Colombia TSX: GCM $5.95 $11.69 Feb 16, 2021 Gold Corp PR Content FRC Opinion Announced that it expects to produce 200 Positive – Our 2021 forecast of 210 Koz is – 220 Koz from the Segovia gold mine in exactly at the mid-point of management’s 2021, up from 196 Koz in 2020. guidance. 2020 year-end results are expected next month. We are forecasting record 2020 revenue and EPS of $393M, and $52M/EPS: $0.84, respectively. The current dividend yield is 2.9% p.a., compared to the sector average of 1.5% (Source: FRC and S&P Capital IQ). ©2021 Fundamental Research Corp. “17+ Years of Bringing Undiscovered Investment Opportunities to the Forefront” Click here to view FRC’s complete list of top picks PLEASE READ THE IMPORTANT DISCLOSURES AT THE BACK OF THIS REPORT
Page 10 Company Ticker Current Share FRC Fair Value Date of PR: Name: Symbol Price: Estimate: Lake Resources ASX: LKE A$0.33 A$0.47 Feb 11, 2021 N.L. PR Content FRC Opinion Completed a A$20M bought deal Positive – LKE’s share price has more than financing. LKE is fully funded through to doubled in the past month. Growing the construction phase for its flagship optimism on electric vehicle metal stocks Kachi lithium brine project. has been driving the share prices of most juniors. We estimate that the average enterprise value to resource ratio of LKE’s direct comparables have increased from US$21/t in July 2020 (which is when we had published our previous update report) to US$130. As a result, we are raising our fair value estimate on LKE from A$0.16 to A$0.47 per share. Company Ticker Current Share FRC Fair Value Date of PR: Name: Symbol Price: Estimate: FPX Nickel TSXV: FPX $0.82 $1.34 Feb 11, 2021 Corp. Feb 16, 2021 PR Content FRC Opinion Initial field tests demonstrate the potential Positive – Final results are expected in Q2- for significant carbon capture in tailings at 2021. These initial results improve its Baptiste project in the Decar nickel Baptiste’s attractiveness as larger district in B.C. producers of electric vehicle metals and battery manufacturers prefer projects with low or zero carbon mining operations. Metallurgical studies on Baptiste have confirmed that the project can be a direct feed for both stainless steel and batteries. ©2021 Fundamental Research Corp. “17+ Years of Bringing Undiscovered Investment Opportunities to the Forefront” Click here to view FRC’s complete list of top picks PLEASE READ THE IMPORTANT DISCLOSURES AT THE BACK OF THIS REPORT
Page 11 Company Ticker Current Share FRC Fair Value Date of PR: Name: Symbol Price: Estimate: ION Energy Ltd. TSXV: ION $0.64 $0.96 Feb 10, 2021 PR Content FRC Opinion Expanded its land package in Mongolia Positive – Shares are up 36% since our by acquiring another 19,000 ha initiating report on February 2, 2021, and prospective for lithium brine for 100% since our introductory note on US$0.31M. It is located 150 km from the December 16, 2020. The company received flagship Baavhai Uul lithium brine project. Mongolia’s first ever exploration license for ION has expanded its land package to lithium brine. Mongolia is severely under 100,000 ha. explored for lithium brine. We believe that management’s track record in the country, and first mover advantage, will allow them to keep expanding their portfolio within the country, and improve their probability of exploration success. Company Ticker Current Share FRC Fair Value Date of PR: Name: Symbol Price: Estimate: Corvus Gold TSXV: KOR $2.99 $3.75 Feb 9 and 11, Inc. 2021 PR Content FRC Opinion Received additional positive results from Positive – Another 20 more holes are the Mother Lode project in Nevada: planned. This, and the prior results announced in 2020, support our assumption ➢ 204.5 metres @ 1.36 g/t, including 37.3 that the Mother Lode project has significant metres @ 5.37 g/t & 10.5 metres @ resource expansion potential. A recently 9.99 g/t completed PEA on the NB project (10 km ➢ 110.8 meters @ 1.68 g/t & 86.9 metres from Mother Lode) had returned an AT- @ 1.65 g/t, including 58.7 meters @ NPV5% of US$452M, with an AT-IRR of 2.47 g/t 47%, using US$1,500 per oz gold. Corvus’ current market capitalization is C$378M, implying that the market is assigning zero value to the Mother Lode project. ©2021 Fundamental Research Corp. “17+ Years of Bringing Undiscovered Investment Opportunities to the Forefront” Click here to view FRC’s complete list of top picks PLEASE READ THE IMPORTANT DISCLOSURES AT THE BACK OF THIS REPORT
Page 12 Company Ticker Current Share FRC Fair Value Date of PR: Name: Symbol Price: Estimate: Southern Silver TSXV: SSV $0.46 $1.06 Feb 9, 2021 Exploration Corp PR Content FRC Opinion Identified bonanza-grade silver Positive - These are very promising results, mineralization on a second target within especially considering that the program is the Mina La Bocona zone at the Cerro focused on step-out drilling for resource Las Minitas project in Mexico. Key results expansion. Drilling is ongoing. Note that the included: project has a resource estimate of 134 Moz AgEq indicated, and 138 Moz inferred. We ➢ 8.0 metres averaging 1,072g/t Ag, are not in a position yet to assign a 18.8% Pb and 7.5% Zn (2,040g/t speculative resource estimate from the AgEq), including 0.6 metres grading current drill program. 3,180g/t Ag, 58.8% Pb, and 2.3%Zn (5,148g/t AgEq) ➢ 16.1 m down-hole (8.5m true thickness/TT) averaging 121g/t Ag, 2.5% Pb, and 2.5% Zn (311g/t AgEq; 7.9% ZnEq), which includes 3.0 m (1.6 m TT) grading 413 g/t Ag, 8.7% Pb, and 9.3% Zn (1,103g/t AgEq; 28% Zn Company Ticker Current Share FRC Fair Value Date of PR: Name: Symbol Price: Estimate: Doubleview Gold TSXV: DBG $0.42 $0.47 Feb 16, 2021 Corp. PR Content FRC Opinion Intersected 98 m of 1.00 g/t Au Eq Positive – These values are significantly (0.73% Cu Eq), within 222 m of 0.57 g/t higher than our preliminary resource Au Eq (0.41% Cu Eq). estimate on the project, which is 540 Mt at 0.57 gpt AuEq. This latest hole has also extended the Lisle zone by an additional 125 m. A maiden resource estimate is expected in 2021. We will update our estimate once all the drill results are published. ©2021 Fundamental Research Corp. “17+ Years of Bringing Undiscovered Investment Opportunities to the Forefront” Click here to view FRC’s complete list of top picks PLEASE READ THE IMPORTANT DISCLOSURES AT THE BACK OF THIS REPORT
Page 13 Company Ticker Current Share FRC Fair Value Date of PR: Name: Symbol Price: Estimate: Azincourt TSXV: AAZ $0.16 N/A Feb 10, 2021 Energy Corp PR Content FRC Opinion Pursuing a $5.1M equity financing. Neutral – Funds will be primarily used for the East Preston uranium project in the Athabasca Basin. Management is planning a 10-12 hole, 2,000 – 2,500 m drill program. Company Ticker Current Share FRC Fair Value Date of PR: Name: Symbol Price: Estimate: Sonoro Gold TSXV: SGO $0.23 $0.32 Feb 16, 2021 Corp. PR Content FRC Opinion Results of 24 holes totaling 2,591 m at its Positive – SGO is expected to work on an Cerro Caliche project in Mexico identified updated resource estimate in Q2, followed a new zone, and extended a previously by a PEA. We are expecting a significant known zone’s strike length. increase in the updated resource estimate. Company Ticker Current Share FRC Fair Value Date of PR: Name: Symbol Price: Estimate: Renforth CSE: RFR $0.07 $0.12 Feb 10, 2021 Resources Inc. PR Content FRC Opinion Resume drilling at its flagship Parbec Positive – Although it is too early to gold project in Quebec. Still awaiting comment on Surimeau’s prospects, we results from the holes completed in 2020. believe the project offers exposure to The company also announced positive electric vehicle metals. With regard to results from the Surimeau prospect, Parbec, we believe the company is likely to including 0.483% Ni over 1 m, and update its resource estimate this year. 0.156% over 13 m from surface. ©2021 Fundamental Research Corp. “17+ Years of Bringing Undiscovered Investment Opportunities to the Forefront” Click here to view FRC’s complete list of top picks PLEASE READ THE IMPORTANT DISCLOSURES AT THE BACK OF THIS REPORT
Page 14 Company Ticker Current Share FRC Fair Value Date of PR: Name: Symbol Price: Estimate: Falcon Gold TSXV: FG $0.10 $0.29 Feb 11, 2021 Corp PR Content FRC Opinion Renegotiated an agreement to acquire Positive – We believe this further diversifies certain gold/silver/copper concessions in the company’s portfolio, which is currently La Rioja Province, Argentina. focused on Canada. The project has returned encouraging high-grade values of 1 m at 9.11 gpt, and 0.42m of 24.3 gpt gold, from prior drilling. The company is awaiting results of a recently completed drill program at the flagship Central Canada gold mine project in Ontario, where mineralization has been traced from surface to a depth of over 161 m. Company Ticker Current Share FRC Fair Value Date of PR: Name: Symbol Price: Estimate: Colibri TSXV: CBI $0.09 $0.17 Feb 9, 2021 Resources Corporation PR Content FRC Opinion Option partner, Tocvan Ventures Corp. Positive – We were pleased with the long (CSE: TOC) reported assay results from intercepts and high-grade values. More its Phase 1 drill program at the Pilar gold- importantly, they were step-out holes. We silver project in Mexico. Key results will update our 150 Koz initial estimate on included: the project once the current program is completed. CBI is currently completing a ➢ 94.6 meters of 1.6 g/t Au, including trenching program at its flagship Evelyn 9.2 meters of 10.8 g/t Au project. The company is also planning an IP ➢ 41.2 meters at 1.1 g/t Au from 57.9 to survey. 99.1 meters, including a high-grade interval of 3.1 meters at 6.0 g/t Au and 12 g/t Ag ➢ 24.4 meters at 2.5 g/t Au and 73 g/t Ag from 96.1 to 120.5 meters, including a high-grade interval of 9.2 meters at 6.3 g/t Au and 192 g/t Ag, and 1.5 meters at 33.4 g/t Au and 1,090 g/t Ag ©2021 Fundamental Research Corp. “17+ Years of Bringing Undiscovered Investment Opportunities to the Forefront” Click here to view FRC’s complete list of top picks PLEASE READ THE IMPORTANT DISCLOSURES AT THE BACK OF THIS REPORT
Page 15 Company Ticker Current Share FRC Fair Value Date of PR: Name: Symbol Price: Estimate: South Star TSXV: STS $0.19 $0.52 Feb 11, 2021 Mining Corp. PR Content FRC Opinion Pursuing private placements totaling Neutral – STS’ shares are up 90% since $2.5M. our update report on January 29, 2021. STS has all the required permits to advance to construction, commissioning, and production. The company has to raise $7.3M to advance to production. Management expects to secure financing, and move to construction planning by March 2021, and commence production next year. Company Ticker Current Share FRC Fair Value Date of PR: Name: Symbol Price: Estimate: Braveheart TSXV: BHT $0.11 $0.42 Feb 11, 2021 Resources Inc. PR Content FRC Opinion Announced positive initial results for the Positive – Ore-sorting will likely lower the application of ore sorting on stockpiled project’s OPEX estimate. Bull River can be material at the Bull River mine project in advanced to production for just $6.5M in B.C. CAPEX. The company is evaluating financing options, and applying for permits to potentially commence production later this year. Company Ticker Current Share FRC Fair Value Date of PR: Name: Symbol Price: Estimate: C3 Metals Inc. TSXV: CCCM $0.16 $0.23 Feb 16, 2021 PR Content FRC Opinion Closed $4.34M of a $7.4M equity Positive – These funds will be used financing. towards the recently acquired Jasperoide project. Jasperoide is an early-stage asset located approximately 50 km east of the Las Bambas mine, 40 km northwest of Hudbay's (TSX: HBM) Constancia mine, and 100 km northwest of Glencore's (LSE: GLEN) Antapaccay mine. ©2021 Fundamental Research Corp. “17+ Years of Bringing Undiscovered Investment Opportunities to the Forefront” Click here to view FRC’s complete list of top picks PLEASE READ THE IMPORTANT DISCLOSURES AT THE BACK OF THIS REPORT
Page 16 Technology and Special Situations Company Ticker Current Share FRC Fair Value Date of PR: Name: Symbol Price: Estimate: Kidoz Inc. TSXV: KIDZ $0.63 $1.08 Feb 16, 2021 PR Content FRC Opinion Reported $7.2M in revenue in 2020, up Positive – Revenue beat our estimate by 58% YoY, $0.92M in EBITDA vs -$0.88M 20% due to stronger than expected ad in 2019, and $0.14M (EPS: $0.00) in net revenues, and a significant increase in profit vs a net loss of $14M (EPS: -$0.12) network from 100M in 2019, to 300M users in 2019. by the end of 2020. Our EBITDA and EPS forecasts were $0.12M and -$0.00, respectively, and well below the actual results. We will publish an update when the financial statements are published. Company Ticker Current Share FRC Fair Value Date of PR: Name: Symbol Price: Estimate: Banxa Holdings TSXV: BNXA $3.03 N/A Feb 16, 2021 Inc. PR Content FRC Opinion Announced a strategic partnership with Positive – We are pleased to see the the SatoshiLabs Group, owner of both, company adding a new client to its portfolio. Trezor, a hardware wallet provider (stores We expect this addition to directly contribute users’ private keys in a hardware device), to Banxa’s topline revenue. We will release and Invity.io, a cryptocurrency exchange our initiating report on Banxa shortly. comparison tool. The partnership will enable users of these platforms to purchase digital assets through Banxa. ©2021 Fundamental Research Corp. “17+ Years of Bringing Undiscovered Investment Opportunities to the Forefront” Click here to view FRC’s complete list of top picks PLEASE READ THE IMPORTANT DISCLOSURES AT THE BACK OF THIS REPORT
Page 17 Company Ticker Current Share FRC Fair Value Date of PR: Name: Symbol Price: Estimate: Clean Seed TSXV: CSX $0.63 $1.14 Feb 4, 2021 Capital Group Ltd. PR Content FRC Opinion Announced that its SMART Seeder MAX- Positive – We are pleased to see Clean S units will commence operations in April Seed moving along with its product launch on farms in multiple regions in Canada. per our estimated timeline. We are Management also plans to hold estimating $1.1M in revenue in FY2021 demonstration events throughout the (unchanged). spring to promote their technology to potential clients and distributors. Cannabis Company Ticker Current Share FRC Fair Value Date of PR: Name: Symbol Price: Estimate: Inner Spirit CSE: ISH $0.32 $0.47 Feb 9, 2021 Holdings Ltd. PR Content FRC Opinion Announced the opening of its 75th retail Positive – We are pleased to see the store in Canada. The latest store was company reaching another milestone. We launched last week in St. Catharines, attended ISH’s webinar last week, where Ontario. management disclosed their plans to have 100 stores (including 25 corporate stores) by the end of 2021. Our revenue estimates for 2020 and 2021 are $27M and $35M, respectively (unchanged). ©2021 Fundamental Research Corp. “17+ Years of Bringing Undiscovered Investment Opportunities to the Forefront” Click here to view FRC’s complete list of top picks PLEASE READ THE IMPORTANT DISCLOSURES AT THE BACK OF THIS REPORT
Page 18 Company Ticker Current Share FRC Fair Value Date of PR: Name: Symbol Price: Estimate: Namaste TSXV: N $0.39 $0.55 Feb 9, 11, & 12, Technologies 2021 Inc. PR Content FRC Opinion Announced that its wholly owned Positive – We are pleased to see the subsidiary CannMart Labs Inc. has company working to grow its revenue received a standard processing licence streams in several ways. Our current fair from Health Canada. Management value estimate does not include CannMart expects to have CannMart Labs Labs’ production and the potential U.S. manufactured products in the market by market entry. We will revise our projections the end of Q2-2021. The company also when more details are released. Our expanded product offerings through revenue estimates for 2020 and 2021 are CannMart.com, through partnerships with $24M and $35M, respectively (unchanged). multiple licensed producers. Namaste shared its plans to enter the U.S. market as well. Company Ticker Current Share FRC Fair Value Date of PR: Name: Symbol Price: Estimate: FinCanna CSE: CALI $0.15 $0.20 Feb 10, 2021 Capital Corp. PR Content FRC Opinion Announced that portfolio company QVI Positive – We are pleased to see stronger Inc. is experiencing growing demand for demand for QVI. We are projecting $861k in manufacturing services (white label revenue in FY2021/year-ended April 2022 production). QVI has been operational (unchanged). since July 2020, and produces for 30 brands. The company also noted that it is getting re-orders from clients. ©2021 Fundamental Research Corp. “17+ Years of Bringing Undiscovered Investment Opportunities to the Forefront” Click here to view FRC’s complete list of top picks PLEASE READ THE IMPORTANT DISCLOSURES AT THE BACK OF THIS REPORT
Page 19 Company Ticker Current Share FRC Fair Value Date of PR: Name: Symbol Price: Estimate: Delta 9 TSX: DN $0.68 $1.24 Feb 9 & 10, Cannabis Inc. 2021 PR Content FRC Opinion Announced that its strategic partner, Positive – We are pleased to see DN’s Oceanic Releaf, has obtained a strategic partner getting licensed, as we cultivation license from Health Canada. believe it will help the company establish a DN owns 5% equity in Oceanic’s 63,000 larger presence in Newfoundland and sq. ft. facilities. DN provided guidance for Labrador. Q4-2020 of $13.7M - $14.2M in revenue, up 29%-34% YoY, and 5%-10% QoQ. The guidance provided by DN is almost in 2020 revenue is estimated to be between line with our $52.37M forecast for 2020. $51.8M - $52.3M. The financial statements will be released on March 30, 2021. Company Ticker Current Share FRC Fair Value Date of PR: Name: Symbol Price: Estimate: Grown Rogue CSE: GRIN $0.34 $0.47 Feb 11, 2021 International Inc. PR Content FRC Opinion Announced that it is raising up to $3M Positive – We are pleased to see the (best efforts). The funds will be used for company raising capital, as it is expanding working capital and corporate purposes. operations through the additional capacity acquired from Acreage Holdings in a service agreement. We are raising our revenue estimates for 2021 onwards, and our fair value estimate to $0.47 (previously $0.31). Our revenue estimate for 2020 is $4M (unchanged), and for 2021 is $20M (previously $10M). Management has stated that the additional space will more than double their indoor grow capacity in Oregon. ©2021 Fundamental Research Corp. “17+ Years of Bringing Undiscovered Investment Opportunities to the Forefront” Click here to view FRC’s complete list of top picks PLEASE READ THE IMPORTANT DISCLOSURES AT THE BACK OF THIS REPORT
Page 20 Weekly Cannabis Commentary Cannabis Industry Performance February 12, 2021 Company YTD 1-Week 1-Year Aphria Inc. 142% -1% 297% Aurora Cannabis Inc. 47% -6% -31% Canopy Growth Corp. 62% -7% 97% Cronos Group Inc. 77% 1% 75% Tilray Inc. 244% 10% 78% HEXO Corp. 101% -8% 43% Organigram Holdings Inc. 179% 48% 62% The Supreme Cannabis Co., Inc. 130% 19% -6% AVERAGE 123% 7% 77% MIN 47% -8% -31% MAX 244% 48% 297% Indexes YTD 1-Week 1-Year HMMJ 72% 2% 73% MCAN 67% -8% 75% XCAN 70% -12% 50% Source: TMX Money, FRC Over the past week, the Horizons Marijuana Life Sciences ETF (TSX: HMMJ / “HMMJ”), the Standard & Poor’s/MX International Cannabis Index (“MCAN”), and the Standard & Poor’s/TSX Cannabis Index (“XCAN”) generated returns of 2%, -8%, and -12%, respectively. This week, HEXO Corp. (TSX: XESO) announced that it will acquire Zenabis (TSX: ZENA) for $235M, to gain exposure to Europe’s cannabis market. This acquisition reflected an EV/R multiple of 2.6x, much lower than the industry median of 13x of large players. This acquisition is in line with our previously stated outlook of 2021 being a year of consolidation in the cannabis sector. Valuation of Select Canadian LPs The following chart shows the average Enterprise Value to Revenue (“EV/R”) ratio of the Canadian cannabis companies we track. ©2021 Fundamental Research Corp. “17+ Years of Bringing Undiscovered Investment Opportunities to the Forefront” Click here to view FRC’s complete list of top picks PLEASE READ THE IMPORTANT DISCLOSURES AT THE BACK OF THIS REPORT
Page 21 Average EV/R (October 2019 – February 2021) February 05, 2021 February 12, 2021 Company Ticker TEV/Revenue TEV/EBITDA TEV/Revenue TEV/EBITDA Aphria Inc. TSX: APHA 11.9 111.4 12.0 112.8 Aurora Cannabis Inc. TSX: ACB 10.9 NM 11.3 NM Canopy Growth Corp. TSX: WEED 40.9 NM 37.1 NM Cronos Group Inc. TSX: CRON 112.3 NM 114.7 NM Tilray Inc. NASDAQ: TLRY 20.7 NM 23.1 NM HEXO Corp. NYSE: HEXO 12.1 NM 11.4 NM Organigram Holdings Inc. TSX: OGI 8.4 NM 13.5 NM The Supreme Cannabis Co., Inc. TSX: FIRE 5.3 NM 6.2 NM AVERAGE 27.8 NM 28.7 NM MEDIAN 12.0 NM 12.7 NM MINIMUM 5.3 NM 6.2 NM MAXIMUM 112.3 NM 114.7 NM Source: S&P Capital IQ, FRC The average EV/R, as of February 12, 2021, was 28.7x – a WoW increase from 27.8x. The average EV/R, from October 7, 2019 to February 12, 2021, was 13.0x. ©2021 Fundamental Research Corp. “17+ Years of Bringing Undiscovered Investment Opportunities to the Forefront” Click here to view FRC’s complete list of top picks PLEASE READ THE IMPORTANT DISCLOSURES AT THE BACK OF THIS REPORT
Page 22 Canadian Retail Cannabis Pricing Province (As of 2021/2/16) Average Price per Gram Average Price per Gram THC Average Price per Gram CBD # of Products Min. Price Max. Price B.C. $ 9.67 $ 9.77 $ 8.42 177 $ 3.53 $ 15.71 Ontario $ 9.62 $ 9.81 $ 8.08 325 $ 4.00 $ 23.98 Quebec $ 9.38 $ 9.37 $ 9.55 228 $ 4.85 $ 21.68 Alberta $ 11.36 $ 11.37 $ 11.00 336 $ 3.93 $ 22.00 N.B. $ 9.95 $ 10.19 $ 7.58 180 $ 3.57 $ 16.28 P.E.I. $ 9.75 $ 9.77 $ 9.34 165 $ 2.20 $ 23.30 Newfoundland $ 10.12 $ 10.08 $ 10.36 155 $ 4.46 $ 15.40 Yukon $ 14.98 $ 15.07 $ 13.95 12 $ 10.49 $ 16.15 N.S. $ 10.34 $ 10.38 $ 9.82 181 $ 5.36 $ 42.85 Nunavut $ 12.91 $ 13.04 $ 12.41 33 $ 5.19 $ 17.91 Northwest Territories $ 14.68 $ 14.68 2 $ 12.08 $ 17.28 Manitoba $ 11.42 $ 11.36 $ 11.62 330 $ 4.90 $ 20.43 Saskatchewan $ 12.40 $ 12.42 $ 12.07 197 4.95 38.50 CANADA $ 11.27 $ 11.33 $ 10.35 Province (As of 2021/2/8) Average Price per Gram Average Price per Gram THC Average Price per Gram CBD # of Products Min. Price Max. Price B.C. $ 9.68 $ 9.78 $ 8.42 173 $ 3.93 $ 15.71 Ontario $ 9.68 $ 9.88 $ 8.08 319 $ 4.00 $ 23.98 Quebec $ 9.39 $ 9.38 $ 9.55 226 $ 4.85 $ 21.68 Alberta $ 11.40 $ 11.39 $ 11.39 335 $ 3.93 $ 22.00 N.B. $ 9.91 $ 10.16 $ 7.58 178 $ 3.57 $ 16.28 P.E.I. $ 9.75 $ 9.77 $ 9.49 165 $ 2.20 $ 23.30 Newfoundland $ 10.12 $ 10.08 $ 10.36 155 $ 4.46 $ 15.40 Yukon $ 14.98 $ 15.07 $ 13.95 12 $ 10.49 $ 16.15 N.S. $ 10.37 $ 10.42 $ 9.82 180 $ 5.36 $ 42.85 Nunavut $ 12.91 $ 13.04 $ 12.41 33 $ 5.19 $ 17.91 Northwest Territories $ 14.68 $ 14.68 2 $ 12.08 $ 17.28 Manitoba $ 11.42 $ 11.36 $ 11.62 326 $ 4.90 $ 20.43 Saskatchewan $ 12.47 $ 12.49 $ 12.08 191 4.95 38.50 CANADA $ 11.29 $ 11.35 $ 10.40 Source: Online Provincial Cannabis Stores, FRC The average retail price per gram decreased week-over-week from $11.29 to $11.27. The below chart shows Canadian retail dried cannabis flower pricing since we initiated price coverage. Canadian Retail Dried Cannabis Flower Pricing Source: Online Provincial Cannabis Stores, FRC ©2021 Fundamental Research Corp. “17+ Years of Bringing Undiscovered Investment Opportunities to the Forefront” Click here to view FRC’s complete list of top picks PLEASE READ THE IMPORTANT DISCLOSURES AT THE BACK OF THIS REPORT
Page 23 Canadian Retail Cannabis Stores As of February 16, 2021, there are 1,557 retail cannabis stores, a week-over-week increase of ten stores across Canada, of which, Ontario had three, Alberta had six, and B.C. had one. Nationwide Store Count Jan-25-2021 Feb-1-2021 Feb-8-2021 Feb-16-2021 Geographic Region Store Count Store Count Store Count Store Count Population Population / Store Alberta 556 561 566 572 4,428,247 7,742 B.C. 306 306 309 310 5,120,184 16,517 Manitoba 56 56 56 56 1,379,121 24,627 N.B. 20 20 20 20 780,890 39,045 N.S. 21 21 21 21 978,274 46,584 Newfoundland 30 30 30 30 520,437 17,348 Northwest Territories 5 5 5 5 44,982 8,996 Nunavut na na na na 39,486 N/A Ontario 389 409 426 429 14,745,040 34,371 P.E.I. 4 4 4 4 158,717 39,679 Quebec 57 60 60 60 8,552,362 142,539 Saskatchewan 45 45 45 45 1,181,987 26,266 Yukon 5 5 5 5 41,293 8,259 CANADA 1,494 1,522 1,547 1,557 37,971,020 24,387 Source: Provincial Websites, FRC ©2021 Fundamental Research Corp. “17+ Years of Bringing Undiscovered Investment Opportunities to the Forefront” Click here to view FRC’s complete list of top picks PLEASE READ THE IMPORTANT DISCLOSURES AT THE BACK OF THIS REPORT
Page 24 Weekly Psychedelic Commentary Psychedelic Industry Performance February 12, 2021 Company YTD 1-Week 1-Year COMPASS Pathways plc -1% 4% N/A Numinus Wellness Inc. 64% 21% N/A Mind Medicine Inc. 36% 15% N/A Seelos Therapeutics Inc. 158% 16% 410% AVERAGE 64% 14% 410% MIN -1% 4% 410% MAX 158% 21% 410% Indexes YTD 1-Week 1-Year PSYK 19% 13% N/A* *Launched on January 27, 2021 Source: TMX Money, FRC Over the past week, PSYK generated a return of 13%. Mind Medicine (NEO: MMED) announced a new partnership with a Swiss start-up to develop and patent next-gen psychedelic compounds. ©2021 Fundamental Research Corp. “17+ Years of Bringing Undiscovered Investment Opportunities to the Forefront” Click here to view FRC’s complete list of top picks PLEASE READ THE IMPORTANT DISCLOSURES AT THE BACK OF THIS REPORT
Page 25 Disclaimers and Disclosure The opinions expressed in this report are the true opinions of the analyst(s) about any companies and industries mentioned. Any “forward looking statements” are our best estimates and opinions based upon information that is publicly available and that we believe to be correct, but we have not independently verified with respect to truth or correctness. There is no guarantee that our forecasts will materialize. Actual results will likely vary. Certain companies mentioned in pages 2, and 9-17 are covered by FRC under an issuer paid model. FRC or companies with related management, and Analysts, may hold shares in some companies mentioned in this report including Barrick, STS, PSYK, and AAPL. Distribution procedure: our reports are distributed first to our web- based subscribers on the date shown on this report then made available to delayed access users through various other channels for a limited time. To subscribe for real-time access to research, visit https://www.researchfrc.com/website/subscribe for subscription options. This report contains "forward looking" statements. Forward-looking statements regarding the Company, industry, and/or stock’s performance inherently involve risks and uncertainties that could cause actual results to differ from such forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, continued acceptance of the Company's products/services in the marketplace; acceptance in the marketplace of the Company's new product lines/services; competitive factors; new product/service introductions by others; technological changes; dependence on suppliers; systematic market risks and other risks discussed in the Company's periodic report filings, including interim reports, annual reports, and annual information forms filed with the various securities regulators. By making these forward-looking statements, Fundamental Research Corp. and the analyst/author of this report undertakes no obligation to update these statements for revisions or changes after the date of this report. Fundamental Research Corp DOES NOT MAKE ANY WARRANTIES, EXPRESSED OR IMPLIED, AS TO RESULTS TO BE OBTAINED FROM USING THIS INFORMATION AND MAKES NO EXPRESS OR IMPLIED WARRANTIES OR FITNESS FOR A PARTICULAR USE. ANYONE USING THIS REPORT ASSUMES FULL RESPONSIBILITY FOR WHATEVER RESULTS THEY OBTAIN FROM WHATEVER USE THE INFORMATION WAS PUT TO. ALWAYS TALK TO YOUR FINANCIAL ADVISOR BEFORE YOU INVEST. WHETHER A STOCK SHOULD BE INCLUDED IN A PORTFOLIO DEPENDS ON ONE’S RISK TOLERANCE, OBJECTIVES, SITUATION, RETURN ON OTHER ASSETS, ETC. ONLY YOUR INVESTMENT ADVISOR WHO KNOWS YOUR UNIQUE CIRCUMSTANCES CAN MAKE A PROPER RECOMMENDATION AS TO THE MERIT OF ANY PARTICULAR SECURITY FOR INCLUSION IN YOUR PORTFOLIO. This REPORT is solely for informative purposes and is not a solicitation or an offer to buy or sell any security. It is not intended as being a complete description of the company, industry, securities or developments referred to in the material. Any forecasts contained in this report were independently prepared unless otherwise stated, and HAVE NOT BEEN endorsed by the Management of the company which is the subject of this report. Additional information is available upon request. THIS REPORT IS COPYRIGHT. YOU MAY NOT REDISTRIBUTE THIS REPORT WITHOUT OUR PERMISSION. Please give proper credit, including citing Fundamental Research Corp and/or the analyst, when quoting information from this report. The information contained in this report is intended to be viewed only in jurisdictions where it may be legally viewed and is not intended for use by any person or entity in any jurisdiction where such use would be contrary to local regulations or which would require any registration requirement within such jurisdiction. ©2021 Fundamental Research Corp. “17+ Years of Bringing Undiscovered Investment Opportunities to the Forefront” Click here to view FRC’s complete list of top picks PLEASE READ THE IMPORTANT DISCLOSURES AT THE BACK OF THIS REPORT
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