LGC Capital News Release

LGC Capital provides positive update on House of Hemp (Pty) Ltd in South Africa with Support from Dube TradePort and Trade & Investment KwaZulu-Natal

MONTREALDec. 20, 2017 – LGC Capital Ltd. (TSXV: LG) (“LGC”) is pleased to provide the positive update regarding LGC’s ongoing due diligence currently conducted on the proposed 60% acquisition of the House of Hemp (Pty) Ltd (“House of Hemp”) in South Africa, under the agreements previously announced on July 18, 2017, and the onsite inspection of the 424,000 square feet of fully operational glasshouses and support facilities at Dube TradePort AgriZone Block “D” located at Durban’s International Airport.

LGC and House of Hemp are also pleased to report the strong support and assistance received from Dube TradePort (“Dube”) and Trade & Investment KwaZulu-Natal (“TIKZN”) for this exciting new agricultural and processing venture in the region.

LGC and AfriAg (Pty) Ltd (LGC’s 50/50 partner in this venture) have been working closely with the House of Hemp’s senior management and advisors during this extensive due diligence period since the Company announced this proposed acquisition in July 2017.  Due diligence is progressing well and on track, and all parties are working to secure the upgraded permits necessary to commence, research, cultivation and commercial production of Medical Cannabis within the new proposed Medical Controls Council (MCC) guidelines which were finally released in November 2017. This transaction is subject to completion of satisfactory due diligence and TSX Venture Exchange approvals.

John McMullen, CEO of LGC stated;

“Our due diligence is proceeding very well, on schedule, to plan and we are very excited about the potential of this project to add significant value to LGC shareholders, AfriAg (Pty) Ltd shareholders, House of Hemp, the Province of KwaZulu-Natal and the South African economy. LGC’s site visits to Dube in Durban last week with AfriAg management, advisors and legal representatives was very encouraging and confirmed the potential of this fully operational 424,000 square feet glasshouse facility. This agri-complex is considered absolutely fit for purpose and ideal for the cultivation of medical cannabis and hemp products. Management engaged actively and positively with all parties, including holding detailed discussions aligning all parties to the vision, mission and strategic objectives of Dube and TIKZN. The development team are working very hard to satisfy all the conditions put forth by the South African government, and once they are satisfied we believe we will receive the appropriate licenses and growing will begin almost immediately. We believe this can be achieved during Q1 2018.”

House of Hemp is headquartered and based in Block “D” of the Dube TradePort’s Special Economic Zone at Durban’s King Shaka International Airport, where it has a long-term lease over Block “D” in the AgriZone. This high security site consists of approx. 37,633m² (405,000 square feet) of fully equipped, temperature regulated and humidity-controlled glasshouses (including multiple plant nurseries), plus associated support infrastructure comprising refrigerated pack houses, laboratories and offices covering 1,760m2 (19,000 square feet).

This complex is regarded by Dube ( www.dubetradeport.co.za ) as one of the most eco-friendly and high-tech facilities of its kind in Africa and their Special Economic Zone (SEZ) is a world-class development offering globally integrated logistics and manufacturing infrastructure, and support for a range of airport-related activities, including cargo operations, warehousing, agriculture, and commercial real-estate for office, retail and hospitality.

On December 7, 2017, House of Hemp received written support from Dube TradePort confirming their support to ensure that the Dube TradePort Block D AgriZone site meets all the requirements to operate within the Medical Controls Council’s guidelines. Dube have engaged with the Medical Controls Council in this regard and reiterated their commitment to ensure that the business at Block D operates successfully within the necessary regulations and guidelines.

Dube have advised House of Hemp:

“Agriprocessing & Medical & Pharmaceutical production are key sectors within the Dube TradePort Special Economic Zone for Medical and Pharmaceutical Production and we look forward to accelerating your project here at Dube TradePort. In this regard we can confirm that we have the necessary environmental and zoning approvals to accommodate agricultural production, processing, packaging and distribution within the AgriZone. Furthermore, we are also in the process of establishing a pharmaceutical cluster as part of the Special Economic Zone. This will have shared infrastructure and services aimed at assisting investors in the sector to operate efficiently. We are happy to engage with the relevant stakeholders & regulatory bodies where necessary to assist in concluding the process of obtaining the relevant permits.”

This support from Dube, a South African Government entity under the (KwaZulu-Natal Provincial Government), comes after written and active support from another South African Government entity, Trade & Investment KwaZulu-Natal (“TIKZN”).

TIKZN (KwaZulu-Natal Provincial Government) ( www.tikzn.co.za )have committed to assist House of Hemp by facilitating meetings with applicable stakeholders, who can add value to House of Hemp and to the development of the cannabis industry in KwaZulu-Natal. Trade & Investment KwaZulu-Natal is a South African trade and inward investment promotion agency, established to promote the province of KwaZulu-Natal as an investment destination and to facilitate trade by assisting local companies’ access international markets.

TIKZN and Dube have recorded their willingness to co-operate on assisting House of Hemp to set up a world class centre of excellence in KwaZulu-Natal to conduct research, innovation and commercial training in the following cannabis value chain activities:

  • Seed securing and multiplication
  • Optimizing and fine-tuning cultivation indoors and outdoors
  • Packhouse
  • Nutrient production
  • Tissue culture
  • Marketing
  • Exploring functional use of by-products

TIKZN have also undertaken to:

Facilitate interactions and present the project to relevant stakeholders to garner to support the project promoters in this endeavour, where appropriate, and when needed by House of Hemp, including;

  • Funding agencies, investors/ joint ventures and investment incentives
  • Technology, engineering services and research institutes
  • Special economic zones and related incentives
  • Market linkages and networks
  • Training and human capacity development
  • Help link with experts to develop sustainable out grower models
  • Regulatory and compliance institutions including government

Facilitate the development of an effective cannabis industry association of KZN to among other offer the following shared services to the industry;

  • Provide relevant, reliable sector/ industry information to House of Hemp
  • Facilitate cannabis industry public education and awareness raising
  • Assist with applications for investment and export marketing incentives
  • Assist their overseas partners with applications for business permits
  • Assistance to investors to identify suitable premises and secure capital and operational finance
  • Facilitate supply chain collaboration in collective marketing, bulk buying as well as peer and roll mentorship
  • Facilitate in intergovernmental and industry association dialogues.

Figure 1: LGC Capital’s CEO Mr John McMullen with Dr Thendeka Kunene from House of Hemp in the Dube TradePort AgriZone Block D Glasshouse.

Figure 2: Panoramic shot of inside one of the 3 massive interior modules within Block D glasshouse at Dube TradePort AgriZone.

Figure 3: LGC Capital’s CEO John Mc Mullen in the first of three interior modules in Block D Glasshouse at Dube TradePort AgriZone.

Figure 4: LGC Capital’s CEO John McMullen at the entrance to Block D at Dube TradePort AgriZone.

Figure 5: LGC Capital’s CEO John McMullen showing some of the ‘green’ credentials of Block D at Dube TradePort’s AgriZone.

Figure 6: Separation doors between growing rooms at Block D at Dube TradePort AgriZone

About LGC Capital Ltd.:

LGC Capital Ltd. www.lgc-capital.com is a Canadian incorporated public company listed on the TSX Venture Exchange (TSXV: LG) with its headquarters in Montreal, Canada. LGC is a diversified investment company with core holdings in businesses that provide shareholders with exposure to a diverse range of high-growth businesses, products and services. To date, LGC has entered into agreements for investments in private cannabis operations in South AfricaAustralia and Canada. LGC has a significant investment in Australian Medical Cannabis company Little Green Pharma; a strategic alliance with AfriAg (Pty) Ltd. to grow and distribute medical and recreational cannabis products in the southern African region for export to regulated and certified end users around the world; a strategic alliance with Creso Pharma Limited for the creation of a vertically-integrated cannabis operation, which includes cultivation, IP generation, product development, and commercialization; and is partnering with AAA Trichomes to build one of the largest cannabis legal operation in Quebec.

Information Relating to House of Hemp:

All information contained in this press release relating to the House of Hemp has been provided to LGC by House of Hemp. LGC has relied upon this information without having made independent inquiries as to its accuracy or completeness and assumes no responsibility for any inaccuracy or incompleteness of such information.

Disclosure:

Mr. David Lenigas, who is Co-Chairman and a director of LGC, is also Executive Chairman of AfriAg Global plc and a director of AfriAg (Pty) Ltd. AfriAg Global plc owns 40% of AfriAg (Pty) Ltd.


Company & Media Contacts:

Canada Contact:
John McMullen, Chief Executive Officer
Tel: +1(416) 803-0698
Email: John@lgc-capital.com

London contact:
Anthony Samaha, Chief Financial Officer
Tel.: +44 (0) 20 7440 0640

Investor Relations contact:
The Howard Group Inc.
Dave Burwell, Vice President
Tel: +1(403) 221-9015
Toll Free in Canada: 1-888-221-0915,
Email: dave@howardgroupinc.com

FORWARD-LOOKING STATEMENTS
This press release may contain forward-looking statements with respect to LGC Capital Ltd. (“LGC”), its proposed investment in House of Hemp, and LGC’s operations, strategy, investments, financial performance and condition. These statements generally can be identified by use of forward-looking words such as “may”, “will”, “expect”, “estimate”, “anticipate”, “intends”, “believe” or “continue” or the negative thereof or similar variations. The actual results and performance of LGC, including its proposed investment in House of Hemp, could differ materially from those expressed or implied by such statements. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Some important factors that could cause actual results to differ materially from expectations include, among other things, general economic and market factors, competition, government regulation and the factors described under “Risk Factors and Risk Management” in LGC’s Management’s Discussion and Analysis for the fiscal year ended September 30, 2016, as filed on SEDAR (www.sedar.com). The cautionary statements qualify all forward-looking statements attributable to LGC and persons acting on its behalf. Unless otherwise stated, all forward-looking statements speak only as of the date of this press release and LGC has no obligation to update such statements, except to the extent required by applicable securities laws.

Caution Regarding Press Releases
Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.