Why has the THC share price climbed 13% in 2 days?

The THC Global Ltd (ASX: THC) share price climbed 13% after the company emerged from its trading halt with a grant for a second cannabis manufacturing licence.

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The THC Global Group Ltd (ASX: THC) share price climbed 5.92% higher yesterday and a further 7% this morning after the company emerged from its trading halt with a grant for a second cannabis manufacturing licence.

What did THC announce yesterday?

After entering a trading halt on Friday, THC yesterday announced that its wholly owned subsidiary, THC Pharma Pty Ltd, has been granted a licence from the Australian Office of Drug Control for its Southport manufacturing facility.

CEO Ken Charteris commented that THC now has the largest biopharma extraction facility in the Southern Hemisphere and the company is ready to commence production of Good Manufacturing Practice (GMP)-compliant active pharmaceutical ingredient (API) isolates at globally significant volumes and competitive pricing.

THC estimates that the initial annual production from the Southport facility will be more than 12,000 kilograms of GMP API isolates, with the ability to further process these extracts into finished medicines such as oils and capsules where necessary.

The Australian-produced Southport products are expected to be available for Australian clinical and study trials, as well as being exported to Asia to use in foreign clinical and study trials.

THC expects that it will complete product validation activities at the facility in Q419, followed by commencement of significant revenue-generating medicinal cannabis production commencing in early 2020.

The licence that the company has received also enables THC to further expand its product formulation and development activities to develop "the next generation of medicinal cannabis products".

THC expects these to drive medium-term revenue as it launches its new proprietary products into markets in Australia and further abroad.

What's been happening to the THC share price?

With yesterday's 5.95% share price increase, and today's 7% move, THC is now trading broadly flat throughout 2019 and boasts a market capitalisation of $65 million, as at yesterday's close.

The company is still very much in the small-cap range on the ASX but this latest development does pave the way for the company to become a bigger player in the highly competitive global export market for cannabis products.

Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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