LONDON (Alliance News) - Highlands Natural Resources PLC on Wednesday said it raised GBP1.6 million through a share placing, beating its target of "at least" GBP1.3 million, in order to launch a cannabis operation in the US that will use gas from its wells there.
The natural resources company issued 18.3 million shares at 8.5 pence each in the placing on PrimaryBid.com as the fundraise received "strong" demand from private investors.
Highlands shares were trading down 9.3% at 8.80p each early Wednesday morning.
When announcing the placing on Tuesday, Highlands had said it was hoping to raise at least GBP1.3 million.
The funds raised will be used to established a new subsidiary - Zoetic Organics - in the US state of Colorado and develop a organic, vertically integrated cannabidiol operation.
The idea followed a trial that showed hydrogen from Highlands' natural gas operation in Kansas, discovered last summer, could be used as a fertiliser at a cannabis operation in Colorado. Highlands said the gas mixture increased plant size, height, root diameter and flower count by up to 30%.
Zoetic Organics will target sales of organic hemp oil, tinctures and cannabidiol-infused chewing and smoking products. The new ventures will be developed alongside its existing natural resource ventures.
"Zoetic Organics provides us with a compelling opportunity to enter the rapidly growing [cannabidiol] market at low cost and to secure the value that our large, rare and valuable gas discovery creates for organic agricultural operations for shareholders," Chair & Chief Executive Officer Robert Price said.
He added: "I am delighted with the support we have received from investors and we look forward to establishing this new operation, which is expected to be profitable in 2019, in the coming weeks."
Admission of the new shares to trading is expected on Tuesday, following which the company will have 136.5 million shares in issue.