BacTech Environmental Corp. (BAC:CSE;BCCEF:OTC;OBT1:FRA) said it has signed letters of intent with several mining cooperatives to deliver up to 58 tonnes per day (tpd) of gold concentrates to be processed at its new bioleaching plant in Ecuador.
The company said it will negotiate the final terms of the deal prior to its plant opening in Tenguel in the first half of 2023.
The agreements cover arsenopyrite gold concentrates from three mines and processors, and were signed on July 5 and July 12, the company announced.
Moving the bioleaching process into production is a big turning point for the company, said Chris Temple, editor, and publisher of The National Investor.
“I am quite confident that once they build this initial plant, and it starts processing, and everybody sees that the company is making money, the miners are making money, (and) the government is making money, … you're going to see this thing cloned really fast,” Temple told Streetwise Reports.
Bioleaching uses naturally occurring bacteria to produce metal and makes it possible to work with lower-grade ore and recover metals from tailings sites as well as mines. Since first being attempted commercially in South Africa in 1986, there have been more than 20 bioleach plants built globally since then.
How do the bacteria eat rocks? BacTech President and Chief Executive Officer Ross Orr says to picture a brick wall where sulfur is the mortar holding everything together in the rocks. The bacteria chew and oxidize the sulfides. Once the mortar is gone, the wall comes crashing down.
The new agreements add “another layer of credibility that this thing is actually going toward production,” Orr said.
Co. Fresh Off Agreement With Government
The Ecuadorian government in May signed an Investment Protection Agreement (IPA) with BacTech, giving the green tech company a 12-year exemption from income tax, property rights guarantees, free transfer of profits abroad, freedom of import and export operations, and international arbitration for disputes.
The IPA's terms cover $95.5 million in plant construction and gold production activity through 2024 and additional investments and expansions, BacTech said.
BacTech found out in March that Ecuador had approved the construction permit for its $95.5 million plant near Ponce Enriquez quicker than expected.
There are 90 small mines in the area that produce significant amounts of arsenic along with gold. The 50 tpd plant would be capable of treating high gold/arsenic material and producing 1.75 ounces of gold per tonne of feed for about 30,900 ounces of gold per year, the company said. There is potential for expansion as the total availability of materials in the area is estimated to be 250 tonnes per day.
Contracting for an amount slightly above 50 tpd gives the plant some room to always be at or near capacity when there are supply issues. Orr said the plant has room to stretch in terms of its capacity, as well.
“Could we add another 10 (tpd)? Yes, we could,” Orr said.
The project would have pre-tax earnings of approximately $10.9 million and a two-year payback period, according to data from EPCM Consultores.
The company said local miners also will make more money. It intends to return their compensation back to previous levels before a price reduction imposed by Chinese buyers due to recent import levies on arsenic/gold concentrates entering China.
Orr said BacTech will not purchase any concentrates that have been pre-treated with cyanide or mercury.
“We intend to capture the majority of the local small miner market by delivering environmentally friendly processing that supports fair business practices,” Orr said in Wednesday’s news release.
Ecuador Only the Beginning
BacTech is well-placed to prove that value can be reclaimed from mine waste around the world, Temple said.
“They’ve got some better inroads than anyone in Ecuador,” Temple said. “They’re looking at another potential operation in Peru. They’re looking at … North America.”
BacTech is also working on a pilot facility in Sudbury, Ontario, that will recover nickel, cobalt, iron, and a geopolymer product from pyrrhotite concentrates produced over the past 100 years. The pilot plant should start up sometime this summer.
BacTech has a market cap of CA$15.5 million with 172 million shares outstanding. It trades in a 52-week range of CA$0.17 and CA$0.06.
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1) Steve Sobek wrote this article for Streetwise Reports LLC. He or members of his household own securities of the following companies mentioned in the article: None. He or members of his household are paid by the following companies mentioned in this article: None.
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