HTC Extraction Systems Announces Tolling Contracts, Project Construction, Offtake Agreements and Technology Capabilities Designed to Optimize Production and Distribution of CBD and Other Cannabinoids

REGINA, June 19, 2019 /PRNewswire/ - HTC Purenergy Inc. (TSXV: HTC) dba HTC Extraction Systems ("HTC") has developed and optimized, proprietary extraction and purification systems designed for extraction, and for the distillation and purification of ethanol and ethanol-based solvents, used for biomass, gas and liquid extraction. Recent advances include tolling contracts, project construction, sales, offtake agreements and technology development.

"HTC will continue to drive our business model, where we will own physical assets at our extraction and purification facilities while serving the clean energy and hemp biomass industries," said Lionel Kambeitz, Executive Chairman, HTC Extraction Systems. "Our business model calls for both participating equity ownership and tolling revenue. HTC will use our technologies, construction experience and operating skills to extract and purify hemp biomass, CBD and other cannabinoids at our facilities."

Tolling contracts

HTC recently announced that it has entered into a hemp biomass tolling agreement involving the supply of hemp biomass for the 2019 crop year, from a minimum of 4,200 to a maximum of 5,000 acres of hemp grown in Saskatchewan, utilizing five varieties of Health Canada approved cultivars as the genetic foundation. HTC will be processing a projected 5,000,000 kg of hemp biomass and extracting CBD FSO distillate from the hemp biomass. HTC will be receiving, as the tolling fee payment, a percentage of the extracted CBD FSO distillate for these processing, extraction, purification and distillation services.

HTC is in negotiations with a 60,000-acre recognized Canadian farm leader who is a significant hemp biomass producer and HTC intends to enter into a tolling contract with this producer for the 2019, 2020, 2021 and beyond, production crop years. This new tolling contract being negotiated is anticipated to represent production from a single producer/biomass processor of approximately 4,800 acres from the 2019 crop, up to 30,000 acres for the 2020 and 2021 and beyond, production crops years.

Hemp biomass tolling contracts with producers and hemp biomass providers are being negotiated in the United States for the 2020 hemp crop growing year, whereby HTC will provide "local to grower" drying-to-biomass storage capability, and transportation of dried biomass to an HTC extraction facility.

In Canada, broad acre production of hemp will redefine the global price of CBD and all of the related cannabinoids. With changing legislation, outdoor grower licenses will now be available in Canada under the Cannabis Act. Existing genetics for high CBD/THC hemp are today available and new strains are being developed for "co genetics optimization". Removal of CBD in isolate form will leave the remaining byproducts, THC and other cannabinoids, rich and available for THC singulation/ sale to the THC ingredient market and other CBD cannabinoid singulation/sale to the cannabinoid pharma market.

Project construction

HTC has focused the Canadian implementation of its BOOM (Build, Own, Operate and Maintain) extraction tolling strategy on a location at Port Lajord, some 17 miles southeast of Regina, Saskatchewan. HTC has under construction a 19,000 sq. ft GMP Euro compliant extraction tolling facility, on 6 acres of land, which will include biomass processing, extraction, implementation of DeltaSolv technologies and Delta Purification systems, distillate and refining equipment, laboratory quality control and testing operations, and on-site office and administration. These equipment systems will be installed and commissioned inside this new facility. HTC is developing this GMP Euro compliant processing, extraction and refining tolling facility, as being the highest throughput and highest product quality extraction and refining facility in Canada.

HTC has shortlisted and is selecting a location in the United States for a large-scale extraction facility. In conjunction with this build out of HTC's United States extraction infrastructure, there will be the build out of semi-portable "local to grower" drying infrastructure, that will ensure that the quality of the biomass dried and processed ready for extraction will meet HTC's SOPs and best practices.

HTC wishes to replicate its historical skillsets, process design and SOPs as one of Canada's largest CBD extractors and refiners, in the United States, utilizing its experience gained and its intellectual property as a recognized industry leader in ethanol-based extraction and purification. It will adapt scalable production techniques of one of Canada's most successful and recognized farming leaders and leverage the SOPs and best practices in genetics, fertility, crop protection and ingredient sales with multi-year contracts.  It will further diversify production and genetics through irrigation and provide an opportunity for two annual crop rotations, with new high CBD genetic varieties.

Sales and offtake agreements

HTC has contracted Purely Canada Foods ™ to provide the sales and distribution for its ingredient CBD into the market under the brand of Purely Canada Hemp™, Purely Canada CBD™, Purely Canada Cannabinoids™ and Purely Canada THC™. Purely Canada Foods™ will develop multi-year ingredient supply contracts with its existing and new global food, beverage and animal food industry customers. The multi-year supply will be risk managed with an expanded dedicated acreage, proxy crop insurance, Act of God clauses and customer/supplier risk formulas, effectively creating synthetic futures contracts for the delivery to our multi-year ingredient contracts while de-risking the supply side.

Current and New technologies

HTC has, for more than 14 years, developed and optimized, proprietary extraction and purification systems, that have been designed for extraction, and for the distillation and purification of ethanol and ethanol-based solvents, used for biomass, gas and liquid extraction.

HTC's patented Delta Purification® technology will purify, recycle and reuse the extraction ethanol, used in CBD extraction process, while managing and reducing any CBD waste losses, through the re-extraction of all wastes collected from the purified ethanol. Large users of ethanol and solvents for plant oil extraction, demand reduced capital and operating costs. HTC's re3 (reclaim, recycle, reuse) technology can save up to 30% of the required fluid costs. The increasing cost of new extraction ethanol, combined with the cost of used ethanol disposal, creates a unique opportunity whereby the re3 technology will create cost savings, while meeting environmental responsibilities. The growth of ethanol and CO2, used in Cannabidiol extraction (CBD production), has created a new demand for reliable commercial scale ethanol reclaimer systems. The Delta Purification® ethanol system is capable of meeting this new demand.

The process of biomass processing and CBD extraction can be divided into three stages, namely pre-oil preparation for processing, oil extraction and oil refinement. During the pre-oil extraction stage: the plant materials are broken down and the plant tissue is opened for efficient ethanol penetration; the plant biomass moisture content is reduced through gentle drying techniques to 8-10% moisture; and the dried processed plant biomass ("Biomass") is bagged or bailed for storage. During the preparation for CBD processing, the Biomass is immersed and penetrated with ethanol and the resulting ethanol liquid, containing cannabinoids, oils, ethanol and plant liquids, is removed from the plant fibers. During the last phase, the oil is collected and 90% of the ethanol is removed and recycled, which delivers an approximate 50% CBD oil (crude oil), providing a potential sale point.  Remaining impurities are removed, and the oil is upgraded to deliver an approximate 75% FSO (full spectrum oil) CBD oil, providing a potential sale point. Chromatography - Chemical Isolation or Molecular Distillation are then utilized to achieve the purest Isolate, free of THC and other terpenes. Many of these refinement processes will allow the isolation of THC and other valuable cannabinoids.

DeltaSolv® is HTC's custom designed, ethanol based, solvent mixtures and additives that optimize extraction and ethanol reclaiming efficiency. HTC's technology development team is developing and testing specialized additives that will increase the ethanol lubricity and improve ethanol to tissue penetration; resulting in a higher extraction conversion ratio and improved ethanol cycle time. This technology development work is being done at HTC's sponsored research facilities at the University of Calgary.

PDOengine™ is HTC's process design algorithms which improves the modelling and simulation of the biomass extraction process. HTC is developing these process design algorithms to optimize the processes of faster ethanol cycle times and the process design of refinement to isolates.

HTC continues to evaluate synergist technology in the field of distillate chromatography, chemical isolation and molecular distillation. HTC is in negotiations in an effort to bring to its extraction refining facilities, the complete flexibility of refinement of 75% distillate sale product to CBD isolate, THC isolate and other cannabinoid isolate products.

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HTC Purenergy corporate developments can be followed on www.htcextraction.com and is traded under the symbol HTC.

This press release contains "forward-looking statements" or "forward-looking information" (collectively referred to herein as "forward-looking statements") within the meaning of applicable securities legislation. Such forward-looking statements include, without limitation, forecasts, estimates, expectations and objectives for future operations that are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of HTC. Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects", "plans", "anticipates", "believes", "intends", "estimates", "projects", "potential" and similar expressions, or that events or conditions "will", "would", "may", "could" or "should" occur or be achieved. This press release contains forward-looking statements pertaining to, among other things, the assumption that crops will yield viable amounts of hemp for CBD oil extraction, that tolling agreements will be entered into and synergies of the technologies will occur.

Forward-looking information is based on current expectations, estimates and projections that involve a number of risks, which could cause actual results to vary and in some instances to differ materially from those anticipated by HTC and described in the forward-looking information contained in this press release.

Although HTC believes that the material factors, expectations and assumptions expressed in such forward-looking statements are reasonable based on information available to it on the date such statements were made, no assurances can be given as to future results, levels of activity and achievements and such statements are not guarantees of future performance.

SOURCE HTC Purenergy Inc.