MGC in Korean supply deal

Medical cannabis company MGC Pharmaceuticals has locked in a supply agreement that it expects to net about $20 million in annual revenue.

Perth-based MGC said today it had executed a binding terms and conditions supply agreement for white-label cannabinoid oil cosmetics products to South Korean cosmetics manufacturer Varm Cosmo.

The agreement was made through MGC subsidiary MGC Derma, of which it owns 51 per cent.

MGC Derma expects to generate about $40 million in annual revenue through the agreement, or an average of $3 million in monthly sales.

At midday, MGC shares had surged 73.6 per cent to 6.6 cents each.

The customer has agreed to purchase a minimum of 15,000 kilograms of cannabidiol per month, with the parties to sign a binding sale agreement in the coming month.

“This watershed milestone supply agreement is transformational for our MGC Derma division and for MGC Pharmaceuticals as a company, and importantly for all our shareholders,” MGC chief executive Roby Zomer said.

“It marks the culmination of much work in building our operations and our brand within this emerging market over the past 12 months, as well as development work for our proprietary formulations by our MGC Pharmaceuticals research team in Europe.

“Varm Cosmo is a great company to partner with to bring our cosmetics product to a wider consumer market.”