The Green Organic Dutchman Provides Construction Update and Increases Capacity

TORONTO, Feb. 1, 2019 /PRNewswire/ – The Green Organic Dutchman Holdings Ltd. (the “Company” or “TGOD”) (TSX: TGOD) (US: TGODF) is providing a detailed construction update on its domestic Valleyfield and Hamilton operations where significant progress has been made towards the completion of both facilities. TGOD recently identified a need for design modifications during the construction process.  As a result of learnings, the engineering design improvements enable optimized facility throughput which, together with organic specific modifications, provide a forecasted domestic productive capacity increase from 156,000 kg to 202,500 kgs. The recently improved designs are being implemented in phases to leverage efficiencies and further learnings from each prior phase, with the objective of achieving best in class results.

The updated construction plan requires an additional three months for start-up in Valleyfield and increased capital expenditures of approximately $30 million for the completion of the structures. These incremental expenditures for the larger processing facility, along with operating system improvements, resulting in the increased capacity, will be phased in over time and are expected to be funded from operational cashflow.

TGOD is pleased to note the Growers Circle launch remains on schedule with first shipments of premium, certified organic cannabis arriving to medical patients across the country this month.

“Not only have we addressed the important redesign requirements, we have also made significant improvements to the operating capacity and capital timing of our facilities, resulting in an additional 46,500 kgs of productive capacity,” said Brian Athaide, CEO of TGOD. “This allows us to bring additional product to both Canadian consumers and global markets.  We are also excited to supply our first patients in the Growers Circle with premium organic cannabis this month, generating our first domestic revenues.”

VALLEYFIELD

• Original Plan:
  • Phase 1 Hybrid Greenhouse and Processing facilities: 820,000 sq ft; 102,000 KG capacity, ramp up in H2 2019
  • Phase 2 hybrid greenhouse: 287,245 sq ft, 40,000 kg, 2020
  • Combined Facilities: 1,107,245 sq. ft. capable of producing 142,000 kg
• Revised Plan:
  • Phase 1a Hybrid Greenhouse: 289,000 sq ft; 65,000 KG capacity, Q4 2019
  • Phase 1a Central Processing facility for all phases: 443,000 sq ft; Q4 2019
  • Phase 1b Hybrid Greenhouse: 289,000, sq ft; 65,000 kg capacity, 2020
  • Phase 2 Hybrid Greenhouse: 289,000 sq. ft.; 55,000 kg, 2021
  • Combined Facilities: 1,310,000 sq. ft. capable of producing 185,000 kgs

By optimizing original design and operating parameters and increasing automation, TGOD estimates it will increase productive capacity by approximately 30%, resulting in an increase of 43,000 kgs of annual production from the total Valleyfield site. TGOD will split its Phase 1 into two parts with the first twelve flowering rooms representing an annual capacity of 65,000 kgs coming online in Q4 2019.  Construction crews will then shift focus to phase 1b of another twelve rooms with production ramp-up in 2020 to provide annual capacity of an additional 65,000 kgs.  Applying similar upgrades to phase 2 with production ramp-up in 2021 will deliver an additional capacity of 55,000 kgs.  This updated plan will now provide a combined output of 185,000 kgs from Valleyfield resulting in significant additional annual revenue potential.  Additionally, the processing facility is being upgraded and optimized to handle the combined output and be scalable for future potential additional production efficiencies from Valleyfield.

“We have run a detailed cost-benefit analysis on Valleyfield’s enhanced strategy,” commented Athaide. “The benefits of the additional production capacity on a phased basis are substantial and far outweigh the extension to the production schedule and additional capital cost. We will utilize our learnings from the design review and progress to date in each phase and continue to strive to achieve efficient and low-cost organic production.”

Valleyfield Construction began in January 2018 on the 2,700 sq. ft. breeding facility. In April 2018 this facility was completed, and in June 2018received a cultivation license.

Please view the latest construction update video for Valleyfield here.

HAMILTON

• Original Plan:
  • Combined facilities: 150,000 sq. ft. capable of producing 14,000 kgs
  • Timeline: Completion H1, 2019
• Revised Plan:
  • Combined facilities: 166,000 sq. ft. capable of producing 17,500 kgs
  • Timeline: Completion end Q2, 2019

Similar to Valleyfield, TGOD has modified major systems from the original design and re-engineered the entire harvesting process to increase production uptime and facility throughput, resulting in increased productive capacity from 14,000 kgs to 17,500 kgs. Vertical grow systems will be installed in vegetative rooms increasing available flowering space and product matrix variability. Three level vegetation gives TGOD the plant counts needed to support increased flowering space and cycles and provides flexibility in multi-strain production planning. The facility redesign and improvements will require an additional two months to complete construction of the hybrid greenhouse which has now been extended to end of Q2, 2019. The Company has grown and successfully harvested multiple crops in its pilot facility and stored product for its imminent medical pilot launch, commencing with the Growers Circle this month. TGOD continues to work with the city of Hamilton and the Local Planning Appeal Tribunal (“LPAT”) on the zoning by-law amendment for the hybrid greenhouse and anticipates a positive outcome.

Please view the latest construction update video for Hamilton here.

On Behalf of the Board of Directors,
The Green Organic Dutchman Holdings Ltd.

About The Green Organic Dutchman Holdings Ltd.

The Green Organic Dutchman Holdings Ltd. (TSX:TGOD) is a publicly traded, premium global organic cannabis company, with operations focused on medical cannabis markets in Canada, Europe, the Caribbean and Latin America, as well as the Canadian adult-use market. The Company grows high quality, organic cannabis with sustainable, all-natural principles. TGOD’s products are laboratory tested to ensure patients have access to a standardized, safe and consistent product. TGOD has a planned global capacity of 219,000 kgs and is building 1,643,600 sq. ft. of cultivation and processing facilities across Ontario, Quebec, Jamaica and Denmark.

TGOD’s Common Shares and warrants issued under the indenture dated November 1, 2017 trade on the TSX under the symbol “TGOD” and “TGOD.WT”, respectively.

For more information on The Green Organic Dutchman Holdings Ltd., please visit www.tgod.ca.

Forward-Looking Information Cautionary Statement

This news release includes statements containing certain “forward-looking information” within the meaning of applicable securities law (“forward-looking statements”). Forward looking statements in this release includes, but is not limited to, statements about the outcomes of zoning appeals in Hamilton, statements about future research, development and innovation by the Company, statements about future facility construction and capital costs, statements about production timing, efficiencies, capacities and ramp-up, statements about future production, revenue and cashflows, statements about the offering of any particular products by the Company in any jurisdiction and statements regarding the future performance of the Company. Forward-looking statements are frequently characterized by words such as “plan”, “continue”, “expect”, “project”, “intend”, “believe”, “anticipate”, “estimate”, “may”, “will”, “potential”, “proposed” and other similar words, or statements that certain events or conditions “may” or “will” occur. These statements are only predictions. Various assumptions were used in drawing the conclusions or making the projections contained in the forward-looking statements throughout this news release. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. The Company is under no obligation, and expressly disclaims any intention or obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable law.

Neither TSX nor its Regulation Services Provider (as that term is defined in the policies of Toronto Stock Exchange) accept responsibility for the adequacy or accuracy of this release.

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SOURCE The Green Organic Dutchman Holdings Ltd.