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Australis and 3 Rivers Biotech Enter into Tissue Culture Joint Venture

Australis Capital Inc. (CSE: AUSA) (OTC: AUSAF) (“AUSA” or the “Company”) today announced that the Company has entered into a binding terms sheet concerning a joint venture (JV) partnership with 3 Rivers Biotech Inc. (“3 Rivers”), a leading agricultural technology company specialised in commercial scale micropropagation, or plant tissue culture (PTC), for cannabis, hemp and traditional crops.

The JV

Under the terms of the agreement, AUSA and 3 Rivers will own 15% and 85% of the JV, respectively. The intent of the JV is to jointly market the 3 Rivers’ offerings to growers. Through the JV, 3 Rivers will provide access to its IP and innovative services, products and solutions to AUSA sourced clients. These innovations include all current 3 Rivers offerings as well as access to future products such as PTC-based auto-flowering genetics, which provides a clonal hemp or cannabis plant that will flower independent of day length. This is a potential game changer for outdoor growers. AUSA will contribute sales and marketing capabilities and, through its deep industry network, the ability to generate new opportunities.

The Opportunity

With over 1,000 cannabis companies, close to 600,000 acres planted with hemp in North America and Europe alone (representing approximately 1.1 billion plants)1, as well as 1.3 million acres2 (~56.6 billion square feet) of global greenhouse vegetable area, the opportunity for 3 Rivers is very substantial (these numbers leave out greenhouse production of fruit). Through its innovative offerings and in particular its nearly peerless capabilities in cannabis and hemp, the company is exceptionally well positioned to deliver significant growth. The joint venture with AUSA will generate mutual benefits through increased access to marketing channels addressing the various markets both AUSA and 3 Rivers operate in.

Advantages of PTC

PTC entails growing a plant from a small number of cells, rather than from seeds or clones, under strictly controlled sterile conditions in a nutrient medium. PTC has numerous benefits with a significant positive impact on growers’ economic returns:

  • Increased facility ROI through true Generation Zero plantlets: PTC delivers disease-free starting material, increasing vigor (faster and healthier growth), and improved metabolite (cannabinoid or terpene) expression (greater product quality), increasing the economic return of a facility
  • Increased facility efficiencies: when adopting PTC, a cultivator no longer requires a mother room, thereby freeing up licensed space for flowering of commercially valuable crop, increasing a facility’s yield
  • Risk Mitigation
    • Reduced risk of crop failure due to pathogen infestation
    • 100% feminized stock avoids risk of rogue male plants, which can destroy an entire harvest
    • 100% traceability of inputs, genetics, and biomass reduces compliance risks
    • Reduced chance of failing strict pesticide testing with clean, laboratory-produced plants
  • Ability to remove pathogens from existing cultivars: producing ‘clean’ plantlets, enhancing yield and quality of a new crop
  • Preservation of Rare or Endangered Species
  • Accelerated Propagation Once a Plant is in Tissue Culture
  • Improved Logistics
  • Shortened Breeding Cycle: accelerated amelioration & genetic variability
  • Improved Harvest Timing: reducing labor requirements

The 3 Rivers Offering

3 Rivers Biotech is a plant biotechnology company specializing in commercial scale plant tissue culture for cannabis, hemp and traditional crops to provide premium pathogen-free, pesticide-free, vigorous plants to cultivators and late-stage nurseries across the United States and Internationally. The 3 Rivers products and services include:

  • Supply of micropropagation derived genetics, disease free Generation Zero plantlets for cannabis, hemp and other traditional crops (fruits, flowers, ornamentals, vegetables, etc.)
  • Ongoing PTC facility management and medium supply services
  • Clean-up of existing genetics: delivering a new generation of disease-free plantlets to growers
  • Storage of rare and valuable cultivars: genetics are the core property based on which growers generate revenues and establish brands. Genetics are therefore exceptionally valuable and safeguarding these is of great importance. PTC enables the indefinite preservation of these genetics.
  • Genetic fingerprinting: ensuring traceability and IP protection
  • Pathogen testing: screening for all predatory viruses, fungi, and oomycetes
  • Technology Transfer:
    • 3 Rivers has developed a production ready, prefabricated PTC lab, capable of producing up to 500,000 plantlets per year, the so-called InstaLab. These InstaLabs, which can be shipped anywhere in the world, greatly accelerate a company’s ability to implement PTC at commercial scale
    • 3 Rivers also designs and develops PTC production as part of a retrofit of existing facilities, or integrated into the design of new facilities

Further innovations around Integrated Pest Management and the delivery of PTC-stable autoflowering varieties, on which the company has a provisional patent, are under development.

Management Commentary

Dr. Duke Fu, Interim CEO of AUSA, stated, “We believe this new partnership will set the standard for science-based micropropagation, and be accretive to AUSA’s results. Being able to offer the propagation of cannabis through tissue culture at commercially viable scale is something that many companies and scientists have attempted, but that very few, if any, have managed to accomplish. This makes the 3 Rivers capabilities unique. The JV provides AUSA with access to an expanded portfolio of extremely valuable IP. We also believe this will strengthen our ability to execute on our capital-light strategy. For instance, being able to offer cultivation partners with PTC reduces the need for our cultivars to take up space in their facilities’ mother rooms, increasing the yield of any given facility. This JV further cements AUSA’s position as an authentic differentiator by offering a unique value add service that is exceptionally difficult to replicate.”

Robert Allen, CEO of 3 Rivers, added: “This partnership is transformative to 3 Rivers. By teaming up with AUSA, we believe we will be able to access new sales and marketing channels and rapidly expand our global footprint for PTC of cannabis, hemp and traditional crops. The JV accelerates our ability to bring our commercially focused innovations to market by gaining access to a deep industry network of industry leaders and operators, and help establish 3 Rivers as the leading company in this exciting and economically rewarding field.”

About 3 Rivers

3 Rivers is operational in Canada and Washington State, and is expanding into California and other jurisdictions. Its Washington cannabis operations, serving the local market, are at capacity and the company is in the process of expanding its in-state capacity. Its California operations anticipate internal, partner driven demand to grow to approximately 4-5 million plantlets in the coming years, with further growth coming through external sales.

Through its partnership with JRT Nurseries and its large-scale Mount Vernon tissue culture facility, 3 Rivers has the ability to scale and ship plants globally. This facility is one of the largest and most reputable plant tissue culture nurseries in North America, capable of producing over 12+ million plants annually. The Mount Vernon facility will be leveraged to service global markets for micro-propagated traditional crops, such as soft fruits and vegetables.

3 Rivers eliminates the risks and variables of commercial cultivation by providing its customers with stable genetics and vigorous, disease-free clones. The deeply experienced 3 Rivers team, with over 50 million plants supplied and counting, has been focused on perfecting plant propagation for decades. The unique combination of commercial scale PTC for cannabis, science-based R&D on applications with a rapid time to market and broad service offering have resulted in 3 Rivers rapidly expanding into becoming a world leader in its field.

About AUSA

AUSA is implementing a growth strategy towards establishing a highly competitive and profitable MSO in the U.S. and global cannabis markets. AUSA’s business and assets include investments in Cocoon, Body and Mind Inc., Quality Green, Folium Biosciences, and land assets in Washington and Michigan. AUSA is currently working towards the closing of a transaction whereby it will acquire 51% of ALPS, the world’s premier design, construction management, commissioning and post commissioning consultancy for horticultural crops, such as cannabis, fruits, vegetables, mushrooms and algae. If completed, the Company will also hold an option for the acquisition of the remaining 49% of ALPS. AUSA is also working towards completing the acquisition of Green Therapeutics LLC, an award-winning MSO with operations in NevadaMissouri and Oklahoma. Through GT and ALPS, the Company believes it will be able to secure low-cost access to cannabis biomass to fuel the scale up of its award-winning brands across the U.S. and global cannabis markets.

The Company’s common shares trade on the CSE under the symbol “AUSA” and on the OTCQB under the symbol “AUSAF”.

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