2018.01.29 aphria nuuvera combination conference call

Company Name: Black Sparrow Capital Co
Company Ticker: APH CN
Date: 2018-01-29
Event Description: Business Update Call
Market Cap: 2,838.16
Current PX: 17.67
YTD Change($): -1.03
YTD Change(%): -5.508
Bloomberg Estimates - EPS
Current Quarter: 0.010
Current Year: 0.160
Bloomberg Estimates - Sales
Current Year: 42.733
Page 1 of 11
Business Update Call
Company Participants
• Carl A. Merton
• Victor Neufeld
• Lorne Kenneth Abony
Other Participants
• Matt Bottomley
• Noel Atkinson
• Martin Landry
• Daniel Pearlstein
• Neal Gilmer
MANAGEMENT DISCUSSION SECTION
Operator
Good morning. My name is Casey, and I will be your conference operator today. At this time, I would like to welcome
everyone to the Aphria Conference Call. All lines have been placed on mute to prevent any background noise. After the
speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you.
Mr. Carl Merton, you may begin your conference.
Carl A. Merton
Thank you. Good morning, everyone. Thank you for joining us on this call today. With me on the call is Vic Neufeld,
Chief Executive Officer of Aphria; and Lorne Abony, Chief Executive Officer of Nuuvera. I trust that you all had the
opportunity to read our press release issued earlier this morning. We also invite you to review a short presentation
posted to our website that summarizes the transaction. Today's call is intended to give you a bit more color on the deal
and to answer any questions that you may have.
Before we get started, I would like to remind you of the forward-looking statements which are available on our website.
I am also required to read the following cautionary statement. In talking about our financial and operating performance
and in responding to your questions, we may make forward-looking statements, including statements concerning
Aphria's objectives, its strategies to achieve those objectives, as well as statements with respect to management's
beliefs, plans, estimates, and intentions, and similar statements concerning anticipated future results, circumstances,
performance or expectations that are not historical facts.
These statements are based on our current estimates and assumptions, and are subject to risks and uncertainties that
could cause our actual results to differ materially from the conclusions in these forward-looking statements. The
forward-looking statements in this discussion speak only as of today's date, and we undertake no obligation to update or
revise any of these statements.
Now, I would like to turn the call over to Vic Neufeld, Chief Executive Officer of Aphria.

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Victor Neufeld
Thank you, Carl, and good morning, everyone. This is the most exciting day for Aphria and for Nuuvera. Aphria is
continuously looking for new revenue streams and opportunities to bring Aphria-branded medical cannabis to patients
across Canada and in markets around the world.
Today, we are very pleased to announce that Aphria has entered into a definitive agreement to purchase all of the
issued and outstanding shares of Nuuvera. Nuuvera is a leading global medical cannabis company with a strong
presence in Europe, Africa, and the Middle East. The combination of Aphria and Nuuvera creates a leading
international medical cannabis company with excellent growth and value-creation potential. This transaction also builds
on the longstanding and very positive relationship Aphria and Nuuvera have enjoyed.
Knowing Lorne and his team as well as I do gives me great confidence that our two companies will be stronger
together and well-positioned for growth in key markets around the world. Lorne will provide you his perspective on the
transaction shortly.
From the Aphria side, the combination provides a number of significant benefits to the company and our shareholders.
One, the acquisition opens the door to key international markets, including Germany, Italy, Spain, the United Kingdom,
Malta, Israel, Uruguay, and others. Italy, for example, is one of Europe's oldest and most established cannabis markets.
The medical market in Italy is forecasted to be up to CAD 9 billion and is on par or potentially larger than Canada as
measured by both medical and recreational. Through this acquisition, Aphria will own one of only seven medical
cannabis licenses in Italy. In Germany, Nuuvera brings the first import deal with CC Pharma for 2018. They are the
second-largest pharmacy distribution company in the country, supplying over 13,000 pharmacies.
Two, the transaction builds on the strength of both companies in a highly complementary way. It combines Aphria's
proven track record as a low-cost producer of high-quality cannabis with Nuuvera's impressive expertise in cannabis
processing, as well as the state-of-the-art testing and extraction capabilities. Nuuvera will be a strong addition to the
growing Aphria brand and will bolster Aphria's recent accretive and value-added transactions including Broken Coast
Cannabis, proud producers of small-batch, premium-quality B.C. bud.
The combined company is expected to realize a number of the efficiencies in cost savings. The combination is a natural
extension of the company's existing strategic relationship, which includes a number of off-take agreements. We also
expect to unlock economic value from future production by taking advantage of opportunity to cross-sell and upsell
customers through a broader product portfolio and a larger, more diverse global customer base. In all, this positions us
to grow internationally and realize the potential of these emerging cannabis markets.
Three, for Aphria shareholders, the acquisition is expected to be accretive in the first full fiscal year post-closing on an
earnings per share basis.
Fourth, the combination unites Aphria's existing management team with Nuuvera's internationally experienced
management team, a team we have worked with for some time and have great respect for. They have led the expansion
in Nuuvera into new markets at a very impressive rate, and they have built a reputation for offering the highest-quality
purified cannabinoid products. We look forward to Nuuvera team playing an important role in the combined company
going forward.
The transaction has the full support of the Aphria board of directors, and it's supported by a fairness opinion from
Cormark Securities, Inc. We thank our long-term strategic adviser, Clarus Securities, Inc., and our financial adviser,
Stoic Advisory, for supporting us through the transaction.
Aphria's scale is one of the largest and lowest-cost producers in Canada, combined with Nuuvera's medical focus and
global operation provides the combined company with a distinct competitive advantage and positions it for rapid
growth in federally legalized medical cannabis markets around the world. This is a very exciting opportunity for Aphria
and its shareholders, and we believe provides a very attractive opportunity for Nuuvera's shareholders.

Date: 2018-01-29
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Current Year: 0.160
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With that, I would like to introduce, Lorne Abony, Nuuvera's Chief Executive Officer, to provide a few remarks on the
transaction. Lorne?
Lorne Kenneth Abony
Thanks, Vic, and good morning, everybody. I am very happy to be here this morning to discuss this transaction. As Vic
mentioned, Nuuvera and Aphria have a longstanding relationship. We know each other very well and we have great
respect for one another. Specifically, we recognize and understand that each of us brings different yet incredibly
complementary experience, expertise, and assets to this combined relationship.
For Nuuvera, the combination with Aphria gives us all the tools we need to open key international markets and execute
on our growth plan. With this transaction, Nuuvera now adds best-in-class cultivation expertise to our international
network and processing know-how, cultivation know-how for international facilities, starting materials for potential JV
partners, and most importantly the additional strength brought by the fantastic Aphria team.
In sum, alone, Nuuvera and Aphria are each very strong companies. Together, we truly create a platform for mobile
expansion that I believe is unparalleled in the medical cannabis space. For Nuuvera's shareholders, the transaction
provides significant and immediate value, as well as the opportunity to participate in the longer-term potential of a very
strong and well-resourced combined entity. The deal has the full support of the Nuuvera board, and we have signed
lock-up agreements with shareholders, representing over 50% of Nuuvera shares.
With that, I'll turn the call back over to Vic, who will set up the Q&A.
Victor Neufeld
Thanks, Lorne. As you can hear, we are both excited by the opportunity for growth and value creation that's welcomed
this transaction. However, in the interest of time, rather than going on further with dialogue, I would like to turn the call
back to the operator to begin the question-and-answer period. We want to take as many of your questions as we can
before the call ends at 10:45 AM.
Operator?
Q&A
Operator
[Operator Instructions] And your first question comes from Matt Bottomley with Canaccord Genuity. Your line is
open.
<Q - Matt Bottomley>: Good morning, Vic, Carl, and Lorne.
<A - Carl A. Merton>: Good morning, Matt.
<Q - Matt Bottomley>: Congrats on the deal. Just a few questions on my end of the impact of the press release here.
Maybe to start, if you could provide any additional commentary on how Nuuvera fits with Aphria's core competencies
both on where you overlap and maybe where you complement each other. And then maybe this one might be for Lorne,
as well as a little more details on the strategic advantages and what Nuuvera has when it comes to the extraction,
distillation, and processing that was mentioned.
<A - Victor Neufeld>: Okay. I'll tackle part one for that question. Very little overlap. We have a number of synergies
that we would have embarked on ourselves without the Nuuvera skillset, and I believe vice versa. So we have a
tremendous growing capability as we press released 2.3 million square feet of greenhouse, 230,000 kilograms
annualized starting in January of 2019. That was, for the most part, identified as being the supply chain necessary to

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feed the engine called Nuuvera globally. I think we had up to 77,000 kilos assigned for that.
Now with this acquisition and/or the combination of the two organizations and the reach we have in certain
international markets pre-Nuuvera and now the Nuuvera markets, I think you're going to be able to see a diversion, if I
could, from other opportunities we have on the table to make sure that we really feed this engine properly. It's
tremendous excitement that is in front of us on this transaction. Lorne?
<A - Lorne Kenneth Abony>: Thank you, Vic. And, Matt, thank you for the question. I'll answer first in two parts.
With respect to our extraction capabilities, Nuuvera subsidiary is the only standalone Health Canada GMP-approved
facility that is authorized and dedicated under its controlled drugs and substances license to conduct commercial scale
activities with respect to cannabis and also cannabinoids.
We have a state-of-the-art medical laboratory that allows us to maintain the highest standards of cannabis concentrates
by adhering both to Health Canada and FDA pharmaceutical GMP guidelines. That ensures product safety, quality, and
efficacy, which is consistent with the Aphria brand and commitment to excellence.
Secondly, I'd like to talk about how Aphria and Nuuvera combined creates something that I don't think can be created
globally. And I'll use Italy as an example. Italy is a market that's expected to be $9 billion larger than recreational and
medical in Canada combine. There are only seven licenses. The Italian market has for the most part been provided
almost entirely by import and almost entirely by one company in the Netherlands. They had a shortage. We now have
effectively a limitless supply of cannabis that can be brought from Aphria's effect of limitless supply into Italy to help
grow and sustain that market.
So I think that is a good example of one of the combined effects that you'll see from the Aphria-Nuuvera combination
globally.
<Q - Matt Bottomley>: All right. Great. That's very helpful. Maybe just turning to the off-take agreements that you
guys have already entered into, just trying to dig into here what the magnitude of these increased economics, so I
imagine there's retail margin involved with selling directly internationally, but what can you tell about maybe the
pricing in some of these international markets versus what we're seeing in Canada?
<A - Lorne Kenneth Abony>: Yeah. I'll touch on that. Two points. Pricing it for the [indiscernible] (14:21) market
hasn't yet been determined, but I think that it's directionally thought of as anywhere between CAD 9 and CAD 10 at
retail. It's directionally thought of as a 50% margin or 100% mark-up business. So one can sort of derive numbers in
and around CAD 4 to CAD 5 as the business sale. You can compare that to the sort of Pan-European market which is
directionally €9. So, state in another way, CAD 13 is the general pricing.
As I alluded to earlier, the European market has been, until now, constrained by very limited supply. I think that the
Aphria partnership with Nuuvera effectively unlocks that for the first time. And that CAD 13 sale is almost entirely
backed by the government where the patients are reimbursed by their respective healthcare associations. So I think that
not only is the price and as a result of margin and mark-up much better for us in Europe, the fact that patients are
reimbursed medically, I think, will bode very well for the combined organization going forward.
<Q - Matt Bottomley>: Yeah. And you...
<A - Carl A. Merton>: If I could just add a few more countries by way of example. Argentina, for example, we're
seeing price points that are 50% to 100% higher than what we're selling the same products to Canadian patients. There
is tremendous opportunity. I cannot stress the opportunity that Health Canada, ACMPR, the Canadian Space, all the
LPs combined in the image that we have projected globally with other health departments of maturing or mature
countries, what this really means from an import perspective. And it's extremely exciting what the margin and the
accretiveness that can bring to this combined company.
<Q - Matt Bottomley>: Appreciate it. I understand there's probably a lot of people in queue here, so maybe just my
last question I leave it there is looking at the broad portfolio of your potential international avenues to go down, are
there any certain ones that you want to sort of direct us to? I know you mentioned Italy, but I know Germany and Spain
are also pretty attractive markets as well. So, maybe your top two or three in terms of where you think the nearest-term

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opportunity is internationally, and I'll leave it there. Thanks, guys.
<A - Lorne Kenneth Abony>: Sure. So, Germany is the largest country in the EU both in terms of population and
GDP. Germany, as I've previously said, for many years in Canada, we have focused on the policy issues. We focused
first on the legalization of cannabis for medical purposes, and most recently the legalization of cannabis for recreational
purposes. Make no mistake, there is a global secular trend. It is following suit in other countries. It is no longer of
question of if. It's a question of when.
Germany conducted a very comprehensive tender. And while not a lot of commentary can be provided on that, it's
public information that we are, at Nuuvera, one of the remaining finalists, which is a number less than 10. Germany is
approximately 82 million people. The medical market alone is expected to be significantly bigger than Canada in terms
of both medical and recreational. And the pricing, as both Vic and I have alluded to, is quite favorable.
In the interim before licenses are granted, the German regime is being served by import. I believe we had the largest
export sale into Germany through CC Pharma. CC Pharma, as Vic alluded to, is the second largest distributor to
pharmacies in Germany. There's more of that that will come and we're very, very excited with the German market both
from a size perspective, from a efficacy and safety perspective and in terms of our positioning as a combined entity.
I've made – you asked me for top two or three markets. Spain is the fifth-largest economy in Europe. It has a very rich
history with cannabis and with this plant. We announced last week two transactions, I think, were important. One is a
Spanish partnership, an off-take agreement and ownership in what we consider to be the preeminent growing operation
in Spain known as CAFINA. Spain is arguably the best jurisdiction in Continental Europe to grow in. And export from
Spain is also legal. So I think this adds to the existing Aphria story as the lowest-cost producer in Canada. Aphria is
now moving strongly with the combination of Nuuvera to be the lowest-cost producer globally.
The second thing we announced last week was the purchase of a GMP lab in Spain called Medalchemy. It is in the
University of Alicante. They already have 11 APIs or active pharmaceutical ingredients. We think that is yet another
step in our elevation as the highest quality, safest, and most efficacious player globally.
And finally, I have made some remarks about Italy, but again Italy also a large market than Canada. Very limited in its
licenses. Again, we are only one of seven. That is very significant for us. The Italian market has largely been
constrained by supply, and with this partnership with Aphria, effectively we will have an unlimited amount of supply to
provide to Italian patients who are effectively waiting for more medical cannabis to hit the country.
<A - Victor Neufeld>: And if I could, Matt, just to kind of put the icing on the cake, these countries that Aphria was
churning into and the licensed countries that Lorne has just walked you through, I'm just going to add the flavor that the
Aphria greenhouse agricultural grow, really the footprint of what brought us to the forefront of the Canadian medical
cannabis space is absolutely part of the DNA that Lorne and his team and together with our international team is going
to walk forward with an absolute support of using the Aphria IP of greenhouse technology design, engineer, build,
operate, train.
There are countries that will open up their arms. Again, I speak to countries, certain ones in Latin America that are not
opposed to greenhouse, in fact welcome it. And that's where we drive out cost. That's our expertise we bring to the
table. And there will be European countries eventually that will understand the same concept. And so, together, we've
got a well-oiled machine.
<Q - Matt Bottomley>: Well, much appreciated. Thanks, guys.
Operator
Your next question comes from Noel Atkinson with Clarus Securities. Your line is open.
<Q - Noel Atkinson>: Hi. Good morning. Thanks for taking my call. Congratulations on the transaction.
<A - Victor Neufeld>: Thanks, Noel.

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<Q - Noel Atkinson>: First off, I was wondering if you could talk about sort of what you see is the sense of scale of
the supply agreements or the LOIs or pipeline that Nuuvera has [indiscernible] (22:18).
<A - Victor Neufeld>: Lorne, do you want to address that?
<A - Lorne Kenneth Abony>: Yeah. I mean, again, Noel, I think I've alluded to it a little, but I think probably the best
way to think about this is kind of a top-down approach. Looking at the individual country and backing into kind of a
top-down approach is kind of the most that we're comfortable speaking to now. I don't think we've given guidance as a
combined entity.
And so I think that it's important to, again, think about market size, market pricing, and scarcity of licenses. And I think
Italy and Germany are good examples of that, enormous markets, very high pricing, government reimbursement, and
not an environment where there's hundreds and hundreds of licenses. But rather in Italy, seven and it changes though in
Germany, maxed out in single digits.
So, players in those spaces will have with – because of the scarcity of licenses and because of the size of the market,
significant opportunity to be significant players both in terms of market share and actual P&L and accretive impact.
<Q - Noel Atkinson>: And then secondly, just focusing on the Canadian side of the business, for Nuuvera, does this
deal accelerate Nuuvera's ability to sell into the Canadian market at all? I'm thinking of the MOU in New Brunswick or
anything else that you're trying to achieve in the Canadian market, does this allow you to get to market faster?
<A - Lorne Kenneth Abony>: So, Noel, when it comes to the recreational model in Canada, I think what we have
established and well-credentialed in Leamington, our various medical brands or strains, the acquisition of Broken Coast
and the tremendous genetics bank that they have, the ability to grow the aura of B.C. bud, they're growers. We feel that
we have a very good product selection when it comes to bringing forward the rec brands as owned by Aphria. We will,
over the course of the next one or two months, better understand the Nuuvera rec brand strategy in Canada. There are
certain provinces where we focused a lot, if not all of our energy and effort, we as in Aphria. Nuuvera and Lorne
having the first off-take agreement already joined to the Aphria hip walk forward to the Maritimes with their Rolodex
and their relationships.
So I think to answer your question, do not be surprised that once recreational comes, which is not July 1, it's sometime
thereafter, that you will see several recreational brands being promoted. In terms of brand imaging, the conversations
that these brands will have with different consumer profile baskets, once there is an identified advertising, very clear,
very concise with Advertising Standards Council support, and the rules are clear, the penalties are clear of the do's and
the don'ts. You will be very, very impressed with the Aphria go-to-market strategies now combined with the Nuuvera
go-to-market strategy. We will be the leader.
<Q - Noel Atkinson>: Okay. Great. I will get back in the queue. Thanks very much.
Operator
Your next question comes from Martin Landry with GMP Securities. Your line is open.
<Q - Martin Landry>: Hi. Good morning. I was wondering if you could give us more details on the accretion of the
transaction. You mentioned it's accretive on an EPS basis. I wonder if you can talk to us a little bit more about that.
And then maybe if you can give us some color on what form of valuation multiple you're paying for Nuuvera.
<A - Carl A. Merton>: So I'll handle that, Martin. When we looked at the transaction, there are multiple opportunities
for both – well, not for both, there are multiple opportunities in Europe, between Italy, Germany and Spain. And as we
went through those individual countries and reviewed those individual pieces, we ascribe the value at that level. We
then reviewed Nuuvera's Canadian operations, including [indiscernible] (27:16), the various agreements that would
have to be unwound related to us to come to a kind of a global Canadian number on the valuation side, and that was
how we built our purchase price.

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I know that the Canadian investor market likes the value cannabis stocks on the basis of funded capacity and EBITDA
multiple. This deal is very different from that. This has brought an opportunity in the international markets that are
developing and are not as developed as has broken out into Canada. So, I think it's really not an appropriate way to
build your valuation cases.
<A - Victor Neufeld>: But I do believe, Carl, that one of the valuation models, one of the two that were brought to the
board for the review, challenge, dialogue, and approval at the end of the transaction was bringing forward, I believe,
15% of post-closing transaction, 15% shares of Aphria will be held by Nuuvera shareholders. But that, when you look
at the 2019/2020 EBITDA valuation metrics, it was a 2.5 times return to the group if I could call it that. That was one
of the translation metrics. So, very, very accretive. And as I said in my beginning dialogue, we will by the end of the
first year post closing of this transaction, again, making a bold assumption, recreational has already started in 2018, we
will be earnings per share accretive with this transaction, which, if I can do a plug, Carl, how many consecutive
EBITDA positives has Aphria reported to-date?
<A - Carl A. Merton>: Nine.
<A - Victor Neufeld>: Nine. Okay. Thank you.
Operator
And your next question comes from Daniel Pearlstein with Eight Capital. Your line is open.
<Q - Daniel Pearlstein>: Hey. Good morning, guys. Thanks for taking my call.
<A - Victor Neufeld>: Hey, Daniel.
<Q - Daniel Pearlstein>: Couple quick – thank you. Couple quick questions just to start. In terms of some of the
processing in a lot of these countries around the world on the focus on medical, are they focused on any of the dried
flower or any of these opportunities extracts only?
<A - Victor Neufeld>: So, very good question. The needle moves everywhere. I'll let Lorne chime in with a few
European countries, but I can tell you, in most Latin America countries, their oils and oils out of the box that are
CBD-driven, which means our Treasure Island Rideau oil is absolutely the screaming target of what is in demand by
certain Latin American countries. There is a bud that – dried flower that is allowed in one of the Caribbean countries.
But for the most part, where the margins are so enhanced, whenever you can get to an oil product, that would be our
desire, and that's where a lot of that sort of activity is taking place. Our first footstep in the international market almost
18 months ago in Australia, we have two different entities that we have partnered with, Medlab, and that is strictly oil,
and that's a new drug discovery moving along very, very well. And then the second one, the Althea transaction of our
investment is both dry bud and oils with the Aphria medical label wrapped around it.
Lorne, if you want to talk quickly high-level Germany, where it is, dry bud, for example, in Italy.
<A - Lorne Kenneth Abony>: Just a couple comments, and thank you for the question. It's a good question. The
proponents of the markets globally are medical markets. Israel and Continental Europe are medical markets. Doctors
are less likely to prescribe smoking than they are on oil or on oil derivative. We have long said that the future of this
market will be that this product need not be smoked and will largely be smoke-free. So as medical markets, there is a
less of reliance on bud than there is on oil.
Second point I'd like to make is that in Italy specifically, CBD is non-schedule drug. So as Canadians listen to and think
about this, there is effectively no constraints on the sale of CBD in Italy.
<Q - Daniel Pearlstein>: Cool. Thanks. Okay. As a quick follow-up then, what are some of the extraction and
processing assets that Nuuvera brings and what's the historical throughput that the company brings on top of Aphria's
already in process production?

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<A - Lorne Kenneth Abony>: Yeah. As I mentioned earlier, we have the only Health Canada GMP-certified
laboratory. As we bring these businesses together, there will be significant costs and revenue synergies. To be quite
honest, the integration plan on how that works has not been finalized or completed in sufficient detail that we can
outline projections for that suffice that both companies have a core competence in this space, suffice that we think that
they are core competencies that are complementary. And as we begin to roll out our combined sort of pro forma
integration plan, we'll continue to provide the market.
<Q - Daniel Pearlstein>: Okay. And then do any of these countries that you're pursuing want to grow their own
homegrown cultivators similar to how Canada is nurturing its own GDP growth, job growth all over the country? How
long do all of these other countries want to import it from Canada? When did they want to give licenses to their own
homegrown companies?
<A - Victor Neufeld>: So let me kick it off. Lorne, again your experience can tie in. There are certain countries,
Daniel, that today have restrictiveness of chronic conditions that are going to or are allowing for medical cannabis
scripting. So, today, for example, in the country of Argentina – I can go on and on – there's about four or five other
countries under discussion and dialogue – the metrics are not there yet, allowing only oil to service epileptic seizure
control. There's no good business case that allows us to do what we really want to do long term. The government is
very, very open, and as we speak really considering how to engage the medical community in saying what other
chronic ailments they're going to allow.
I threw up a number to the Minister of Health several months ago, you bring me five or six approved chronic ailments
that you will allow the medical community to script and allow the pharmacy chain within the country to sell to patients,
I will build my greenhouse campus in one of your states in the country of Argentina. I will bring employment. I will put
you on the map in terms of a leadership role in Latin America.
So, there's an example where you have to really understand, does it make sense importation for less than X number of
chronic ailments is probably the path. But once they open the door and there's truly an ROI that we can sink our teeth
on or into, that's what we're going to do. [ph] Yes, something like that (35:44).
<Q - Daniel Pearlstein>: Okay.
<A - Lorne Kenneth Abony>: Sorry. Just would like to add to that slightly, when you talk about these countries,
they're really not a monolith. There's three countries in Europe, and so they all have different regimes. For example,
your question as it relates to import as it relates to Italy is as follows. There's seven import licenses, as we've
mentioned. There, however, is one grow license and that grow license is to the military. And that military facility is in
Florence and it's Italian government. That is the only grower that's allowed in Italy and that maxes at 250 kilos per year,
so an extremely insignificant number. So as you think about Italy, you think about that as almost an entirely import
regime that I think bodes very well with this combined entity.
Compare and contrast, for example, that to Spain, which has a long and rich history with the cannabis plant. However,
that is an entirely export regime. So I think that is important and happy to follow up with you on an individual basis.
The country is an auto monolith and that each country has its own regime that will require different analysis and
different thinking.
<Q - Daniel Pearlstein>: I look forward to it. Thank you very much. Grazie, gentlemen.
<A - Victor Neufeld>: [indiscernible] (37:11).
Operator
And your next question comes from Neal Gilmer with Haywood Securities. Your line is open.
<Q - Neal Gilmer>: Yeah. Good morning, guys, and congratulations. A number of my questions have been addressed
so far. I'm wondering maybe if you could touch on a couple of the countries that we haven't focused on so far. I know

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we've obviously focused on the primary opportunities, but maybe a little bit of color on Israel. Are you doing some
market research and development in that country there because I noticed that on the slide deck there as well? And the
perhaps just a little bit about the agreement that you have, the supply agreement that you have in South Africa.
<A - Lorne Kenneth Abony>: Yeah. So, thank you for asking. As it relates to Israel, Israel is like many countries has
been a bit of a moving target. Israel, at first, there was a tremendous amount of hope with respect to export. It does not
look like, in the short to medium term, Israel will be an exporting country. We're proud to have not spent any capacity
or funding there on building significant growth. Distribution in Israel has also changed significantly. It is anticipated
that distribution will go through pharmacy.
I'm probably not going to comment much more on that other than we're incredibly well-positioned in Israel. Just to give
you an idea of the strength of our management team country by country. Our MD of Israel was the former Canadian
ambassador to Israel. We have a full team in Israel and look forward to updating the market shortly on what we think is
a very forward-thinking and very accretive Israeli strategy.
We also haven't commented in great detail on Africa, and I'm going to constrain my comments here. Suffice that Africa
is obviously a very large continent. Prior to the turmoil in the Jacob Zuma government in South Africa, there was
tremendous inroads with respect to the legalization of legalization of medical cannabis in that country which is slightly
under 60 million, 6-0, people, 60 million people. We anticipate the ability to have a significant, very cost-effective,
off-take agreement both in terms of CBD and THC, isolate from Africa, as well as to serve the African continent.
I think that the bigger takeaway there is this combination, again, supports the Aphria narrative as the lowest-cost
producer and expands that Aphria narrative beyond the Canadian borders to the global lowest-cost producer. So we'll
be providing more information on Israel and Africa in months to come. We're excited about that potential both in terms
of market share and in terms of our ability to service those markets.
<A - Victor Neufeld>: Yeah. Neal, I know you're not setting us up for promise of the [indiscernible] (40:20) around
your question, so there are obviously opportunities abounding that are in different stages of dialogue, but – and I know
you don't like to hear the term stay tuned, but I'm going to tell you stay tuned because there are other countries closer to
our home front that are providing major opportunities of using oils, harvested, extracted in Leamington, Ontario for
markets where the margins that are expected are just really, really exciting.
So I guess all I can say is stay tuned. This international journey – I believe there are 11 countries, Lorne, if I'm not
mistaken. If you put me on the spot, I would hope to say that in one year, we have 20 countries under license, some sort
of commercial transaction, oil, dried flower, et cetera, et cetera.
That is the vision. This is a very powerful entity that we've just created. The combination of Aphria and Nuuvera with
all of our respective strengths and how we're all on the same page will absolutely dominate. And thank you, Health
Canada and the ACMPR, to make all of this happen for us.
<Q - Neal Gilmer>: Yeah. No. Fair enough, and I appreciate that. So maybe just one follow-up question there, Vic, is
with this transaction in place and the current sort of footprint that you have in Leamington, how do you look at it going
forward as far as further potential expansion of production in Leamington versus, I guess, weighing the opportunity to
actually, you touched on earlier, when the ROI presents itself in countries such as Argentina or any of the other
countries you're looking at, building actual growth facilities in those locations? Is that something you're just going to
sort of evaluate over the course of the next 12 months sort of thing?
<A - Victor Neufeld>: 12 months? How about 12 weeks? Let me set the stage here. And, Neal, as many of the analysts
on the call have been, you visited us. You've been to the man cave. You've seen what we have built and what we are
building, fully funded. Most of you have not seen our most recent Double Diamond acquisition of 30 acres, 101.3
million square feet. That vision has been reengineered yet again.
So, Neal, to your question, are there bigger, better plans again dominating out of Leamington, Ontario, Canada, under
Health Canada, ACMPR rules, to those countries around the world that are wanting to bring medical cannabis to their
patients yet do not feel comfortable yet to actually have in-country cultivation? Absolutely. Do we see that there is a

Date: 2018-01-29
Current PX: 17.67
Current Year: 0.160
Page 10 of 11
greater need for capacity? Highly likely. So I'll leave at that, so you can fill in the lines.
<Q - Neal Gilmer>: Okay. Great. Thanks very much.
Operator
And there are no further questions at this time. I will turn the call back over to Mr. Carl Merton for closing remarks.
Carl A. Merton
So before we close up the call, I will turn it back to Vic to make the final closing remarks. I know there's a couple of
people that are in queue. We have a tight schedule today. Vic is going to be on BNN a little bit after 11:00 and we need
him to get to BNN Studio soon. So, apologies that we're cutting the questions short after starting late with the
unprecedented level of demand to participate in the call, but we're able to open up some extra lines. So, apologize to the
people who are still in the queue.
And, Vic, I'll let you have any final last words.
Victor Neufeld
Thanks, Carl. Very seldom you let me have the final words at board meetings, Carl, so thank you very much. For all of
those that are listening, this combination of two companies, really if one would relate this to a courtship, we found each
other very attractive in our early days of childhood. Nuuvera, starting from infancy, an idea, the management team
having significant expertise in areas of regulatory, of understanding relationships, bringing the right feet on the ground
country by country to the table, making strategic acquisitions. It was the right fit. And they were a good fit for Aphria
in terms of our earlier off-take agreements. And those agreements are very difficult to put together, yet they were put
together. And at right conclusions were reached on a win-win situation. This combination though really is important to
Aphria. And I know it's the elephant in the room, but this brings the retail margin of that Nuuvera was otherwise going
to earn whether the Canadian recreational footprint or international and brings it on the Aphria income statement.
The margins that Aphria was going to make, again, GrowCo, Double Diamond, acquisition of greenhouses, 60,000
kilos of which was going to be [ph] dev-ed (45:55) into Nuuvera to service their supply chain. The Aphria model now
brings all of that income statement activity to the income statement of Aphria. And it is very, very powerful on what
this can bring to us in terms of shareholder value, EBITDA, and really, really distance ourselves from other licensed
producers who have very flowery press releases out there talking about country A, B, and C. But the execution, I would
strongly urge everyone to understand, can they execute?
I know Nuuvera's journey is young, rather in its infancy, only having been a public company for two or three weeks but
been active for over a year. I think I can proudly say that the Aphria story represents success in its own. And I, as CEO,
as chair of the board, I'm going to do everything humanly possible to move this needle forward on an international
basis.
So, again, thank you, ladies, gentlemen, the listeners, and we're going to sign off now. Thank you.
Operator
And, ladies and gentlemen, this concludes today's conference call. You may now disconnect.
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Date: 2018-01-29
Current PX: 17.67
Current Year: 0.160
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2018.01.29 aphria nuuvera combination conference call

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2018.01.29 aphria nuuvera combination conference call