Great article on $PAF via the Financial Post.

It’s a one-two punch at Pan America Fertilizer, a small TSX-Venture listed company whose business is in “providing fertilizer to growing global markets specifically in South and Central America.”

On Friday, the company that has a market cap of $6-million announced an expansion of its operation to Uruguay while maintaining its base in Argentina. Establishing operations in Uruguay will, it said, ensure that it’s “on track to grow its market share, as fertilizer providers, within the agricultural industry of South America.” Uruguay was chosen to allow the company to capitalize on that country’s agricultural market as well as allow for “diversity’ in the types of products on which its fertilizer can be used.”

On Tuesday Pan American announced the second shoe: an intention to raise $500,000 by way of a non-brokered private placement. It’s understood Pan American limited the amount it wants to raise because of its desire to maintain a tight capital structure. In time the hope would be to raise additional capital – but at higher prices.

The cash raised from its current offering, will be used, in part, to expand into Uruguay, a county that has also received an investment from Dundee Agricultural Corp., a unit of Dundee Corp.

DAC has made a strategic investment in privately held Union Group International Holdings that was founded by Juan Sartori, a Uruguayan entrepreneur, who has expanded into real estate and mining from his original agriculture base.

So what are the plans?

In short, Pan American plans to get into the medical marijuana business. Indeed Uruguay will be the testing ground for the company’s existing products as well as developing new blends for medical marijuana and other crops. But Pan America has no plans to get into the production and distribution of medical marijuana – a business that becomes legal next month — in Uruguay. (In April, producing medical marijuana under a government licence also gets underway in Canada. At least one of those companies, Tweed Inc., will be public.)

According to a source familiar with Pan American’s plans, the company is not looking to grow marijuana to sell to the market. Rather it is planning a long-term study of its products with a view to increasing the yield of marijuana and other important high value crops.

Pan American will move into that industry by working with scientists on the development of an outdoor marijuana grow-op testing centre that will use its fertilizer and/or additives. The aim is to use its products to produce higher quality medical marijuana or other crops.

Accordingly, Pan American argues that the best way to make a return for its investors in the medical marijuana market, is not through growing the stuff – but to help those who have that goal by supplying them the best and most productive set of raw materials.

And Pan American may seek joint venture partners to help finance the purchase of operating assets – and avoid dilution of its existing shareholders. If the government of Uruguay allows widespread commercial production of marijuana, in the next few years, then Pan American may be in a good position to develop its base.

Certainly the market has taken notice of the company. According to Bloomberg, recent trading has jumped to many times the daily normal while the share price has also risen. It closed Tuesday at $0.175 – or about four times the level of one month back.


SOURCE: http://business.financialpost.com/2014/03/18/pan-american-plans-its-medical-marijuana-strategy/