Neptune Wellness Solutions Inc. NEPT NEPT said Thursday it has signed a two-year agreement to provide extraction service to a large farming services operation in the U.S.
Under the agreement, Neptune will obtain hemp biomass for processing and transforming into crude oil extract, the company said.
The agreement has the potential of obtaining a value of more than $20 million, the company said. The partner in the contract was not named.
Neptune said it expects to obtain the first package of biomass in the upcoming weeks.
The company aims to reach a total extraction capacity of 3 million kg of biomass annually to be delivered evenly between Canada and the U.S.
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"This large contract will support our capacity expansion at our North Carolina facility and better position us to serve the growing United States market,” Neptune CEO Michael Cammarata said in a statement.
“Our expansion in North Carolina is on time and on budget, with extraction capacity expected to reach an annual run-rate of 1,500,000 kg of biomass by December 2019."
The demand for extraction and formulation services is strong in the U.S. given the ongoing harvest season, the CEO said.
Neptune's tolling and formulation pipeline to deliver high-quality, full- and broad-spectrum extracts "remains robust," Cammarata said.
"This announcement represents a further step towards our customer and geographic diversification strategy."
Additionally, Neptune said it hired Brett DuBose as vice president of sales for the U.S. region.
"With his extensive industry contacts and experience, Brett will play a key role in helping Neptune accelerate its market penetration in the U.S.," Cammarata said.
Neptune stock was trading 0.72% higher at $3.52 at the time of publication.
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