Gold miner Cannindah thought about baby formula but went with hemp
Gold explorer Cannindah Resources is about to start selling hemp products.
Cannindah (ASX:CAE) has signed a deal to distribute hemp products made by Czech company Annabis.
Chairman Tom Pickett says the move is part of a long-flagged diversification strategy away from resources.
“For a long time now Cannindah has been expressing its view that it would like to diversify into other things. Some time ago we looked at milk powder products to export to China,” he told Stockhead.
“We’re extremely lucky that we have some very good exploration projects.
“We have a clear plan on how to develop those projects… [but] we have a strength in our board that is across a number of sectors so we are able to provide enough executive power to deal with the diversification process quite easily.”
Mr Pickett and director Laurie Johnson are resources men, while Geoffrey Missen is an accountant by trade who counts tech and agriculture among his boardroom experiences.
The company said that given “the recent success of other listed entities being involved in the hemp seed oil sector”, they decided that would be their sector.
Nine products will be sold via the company’s subsidiary Cannindah Bioceutical Distribution.
Mr Pickett says shareholders have so far been generally supportive of the move.
The company’s flagship project is the Mount Cannindah copper-gold project.
Riding the hype train
Cannindah was negotiating a milk powder deal in 2016 to export Little Treasure infant formula into China.
Mr Pickett says they cancelled it because of the rise of heavy regulations in China around formula sales.
Those regulations have only become more stringent.
The infant formula-to-China investment theme gained steam in 2015 when Bellamy’s (ASX:BAL) shares first began to run.
Hemp has potential to become a very popular sector, riding off the coattails of medical marijuana after being legalised in Australia in November 2017.
Hemp in Australia is bound by fewer rules because it contains vanishingly low levels of THC, the part of cannabis that makes you high. Hemp is a variety of the cannabis species.
Products contain very low levels of cannabidiol (CBD), an element many medical marijuana companies are focusing on for drugs, that are too low to have a medical effect and therefore trigger regulations from the Office of Drug Control and Therapeutic Goods Association.
What this means in Australia is that it’s possible to import and sell hemp-based cosmetics, skincare and foods.
Mr Pickett says they have a staff member with a science degree and diploma of nutrition who they’re been working with on the diversification plan.
Cannindah shares are up 8 per cent to 2.8c.