Miner-turned-cannabis purveyor Queensland Bauxite has bought Medical Cannabis Ltd and its legendary seed bank.

Queensland Bauxite (ASX:QBL) bought 55 per cent from founder Andrew Kasavilas in March 2017.

The company’s shares opened up 30 per cent at 6.4c before settling up 22 per cent at 6c. It closed seven weeks ago at 4.9c.

Critically, it now controls Mr Kasavilas’ cannabis seed bank, made famous on the ABC Four Corners documentary for being stored in his freezer.

In a 131 page statement to the market, Queensland Bauxite said it will pay 1.195 billion of its shares for MCL, worth 4.9c each making the dollar price $58.6 million. It effectively values Medical Cannabis Ltd at $130.1 million.

Queensland Bauxite bought its first stake in MCL for 49 million shares and had been considering floating the subsidiary on the ASX.

Queensland Bauxite shares over the last six months.

Buying a licence

The miner has also bought Medcan Australia, holder of a crucial medical cannabis production licence.

The Medcan acquisition means Queensland bauxite will now be able to start the process towards cultivating Mr Kasavilas’ seed bank.

A licence allows a company to start the process of setting up growing facilities. But in order to use them, a company needs a permit, gained only after all security processes and facilities are in place to standards set by the Office of Drug Control.

Queensland Bauxite says Medcan already has access to a facility, which it says will be able to start operations by the end of the year.

Queensland Bauxite is paying 250 million shares for Medcan, giving the founders of that company an 8 per cent stake in the miner.

Founders Craig Cochran and Gareth Ball will stay on to manage the company for at least two years, under an agreement that sees them receive 1.25 million and 1 million shares respectively over the next two years as part of their remuneration.

The Medcan deal is subject to shareholder and regulatory approvals. If Queensland Bauxite can’t achieve these by August 31, the deal is off.

The deals bring to a close a seven week suspension from trade.

In order to pay for the acquisitions, Queensland Bauxite is raising $5 million with shares priced at 8c.

Queensland Bauxite has been contacted for comment.