In a recent development, BacTech announced a $3 million non-brokered private placement offering. The net proceeds of the offering will be used for ongoing working capital, land acquisition, and to advance the company’s Ecuador bioleaching project.
BacTech Environmental Corp. (BAC:CSE;BCCEF:OTC;OBT1:FRA) uses bioleaching technology to significantly improve the environmental impact of mining. Based in Toronto, the business is focused on copper, silver, and gold projects that contain arsenic in Ecuador, Peru, and Colombia.
BacTech Forecasts $10 Million EBITA From Bioleach Processing Plant In Ecuador
On Feb. 8, BacTech announced new details about the feasibility of its proposed bioleach processing plant planned for Ecuador. Ecuador has been on the radar as its many small mines produce a significant amount of arsenic in concert with gold, which is bad for the environment as well as the population’s health.
New data from EPCM Consultores finds that the bioleach project would have a pre-tax earnings of approximately $10.9 million and a two-year payback period.
Previously, the company estimated pre-tax earnings from the project at $8.94 million.
The company estimates that the BacTech plant will start production in Q1 2023. Further, the updated feasibility study assumes a capital cost of $17 million, a $1,600 gold price and a $18 silver price.
BacTech To Test 7 Samples From Peru
In addition to the feasibility study in Ecuador, the business is also testing its technology in Peru. Specifically, BacTech will soon receive seven concentrate samples over the next few months. These fifteen-kilogram samples will help prove the value of BacTech's technology further in Peru. The test will focus on copper and gold concentrates. The Peru project samples — which will focus on copper and gold concentrates — will be tested at ALS Laboratories in Perth, Australia, by Dr. Paul Miller, BacTech’s head of bioleaching who holds a Ph.D. in chemical engineering.
The Peru test is a crucial step toward proving the value of the technology to the mining industry. "New technology in mining tends to be looked at with furrowed brows. Many in the industry have skepticism about applying new technology in mining. Our technology is different because the underlying innovation is not brand new — it has already been commercialized in gold by us three times," BacTech President and Chief Executive Officer Ross Orr told Streetwise Reports.
In addition to the Peru test, BacTech has heard from other companies. "We've had a lot of interest from junior mining companies so far," Orr told Streetwise.
BacTech successfully demonstrated its copper technology on chalcopyrite with Industrias Penoles of Mexico.
Bioleaching: Cleaning Up Mining With Bacteria
Bioleaching technology has been in limited use since the 1980s. According to Genome Atlantic, it was first used commercially at the Fairview gold mine in South African in 1986. The process makes it possible to work with lower-grade ores and extract metals from tailing sites as well as mines. In simple terms, bioleaching involves using naturally occurring bacteria to process metals.
Bioleaching itself is not new as there are over 20 bioleach plants built to date. BacTech and Goldfields are the only known commercial developers of the technology. Two recent trends — arsenic import tax policy in China and growing environmental concerns — are helping to boost demand.
Chinese Tax Changes Create Opportunity
Environmental concerns do not solely drive BacTech's opportunity in South America. In October 2021, the Chinese government imposed a 13% tax on arsenic gold concretes coming into the country. As a result of these tax changes, BacTech estimates that miners across South America are paid 50% less for their gold concentrates.
"In Peru the miners were telling me that they get $80 per tonne for rock valued at $500 (copper, gold, silver) from the Chinese buyers," Orr commented. "Due to the Chinese import tax changes, we can pay significantly more to the miner and keep the processing in country.
BacTech's technology may give South American miners an alternative to processing ore in China. Even with tax rule changes, demand for alternative ore processing is unlikely to disappear.
US Government Interest in Rare Earth Minerals
BacTech is currently seeking partners. "We would love to work with MP Materials Corp. (MP:NYSE) in the United States to help with rare earth mineral processing, currently a very dirty process. The U.S. government has recently identified rare earth supply as a concern," Orr explained.
In January 2022, the U.S. government considered a bill that would block defense contractors from using rare earth minerals from China by 2026. In addition, the Pentagon has identified the rare earth supply chain as a strategic concern.
Since BacTech is based in Canada and currently works in South America, it may help to alleviate U.S. government concerns about dependence on China for critical elements. BacTech can help process and recover gold, silver, cobalt, and copper.
Riding the Growing ESG Trend
In addition to finding partners, financing is a top priority. The company is currently in conversation with potential financial partners. "I'm finding that ESG (i.e., environmental, social, and governance) is a hot topic right now. Our company meets the social element by boosting local employment in South America. In terms of the environment, our technology improves the environment," Orr commented.
Managing the social impact of increasing paychecks can bring some unexpected challenges. "Ecuador has a law that states your employees are entitled to a percentage of the company's after-tax profit every year. If we're paying these people $1,000 a month, which is a pretty good wage for that area, their annual bonus might be up to four times their annual salary. To manage that windfall, we will educate our employees on financial literacy, like setting funds aside for their children's education for example," Orr said.
Meeting ESG requirements is an essential priority for many investors. In 2021, Reuters reported that $649 billion flowed into ESG-based funds. Governments are also encouraging ESG investing. The U.S. Securities and Exchange Commission created an enforcement task force focused on ESG and climate issues in March 2021.
Significant current investors in the business include Sol Ecosystems, which has a 13.6% ownership stake, and BacTech management and directors. According to the company's investor presentation, Ross Orr has a 4.2% ownership stake in the business and has paid for every share he owns.
Disclosures
1) Bruce Harpham compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor/employee. They or members of their household own securities of the following companies mentioned in the article: None. They or members of their household are paid by the following companies mentioned in this article: None. Their company has a financial relationship with the following companies referred to in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: BacTech Environmental Corp. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
4) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of BacTech Environmental Corp., a company mentioned in this article.
