Ecuador's President Signs Decree for Bioleaching Plant Permit

Ecuador's president has signed a decree clearing the way for green technology company BacTech Environmental Corp. (BAC:CSE;BCCEF:OTCQB;OBT1:FRA) to construct its bioleaching plant in Tenguel.

The company had received its construction permit and approval from the government for its environmental impact study on the site but has been working through the community consultation phase for the final environmental permit.

President Guillermo Lasso's Decree No. 754 finally sets up the final permitting process for BacTech.

"We have waited patiently for this day to happen," BacTech President and Chief Executive Officer Ross Orr said. "BacTech plans to introduce environmentally friendly bioleaching and remediation solutions that have captured the attention of key community leaders and officials. We are set up to succeed and believe we’ll benefit from an expedited final permitting process."

The plant will be built with environmental, social, and governance (ESG) principles in mind, Orr said. In addition, the "plant will see (workers') pay grow substantially over their current farming wages," he said.

The company also recently announced it is in the process of getting certification as an issuer of Green Bonds to finance the plant. After a contraction last year, analysts expect the energy transition to be a priority and for green bond markets to rebound in 2023. They expect issuance of about US$600 billion, according to Markets 360.

"BacTech is like a poster child for what is legitimately a green cause," said Chris Temple, editor of The National Investor.

BacTech is building the plant to take advantage of the growing green mining space, which research company Markets and Markets said is expected to grow from an estimated US$9 billion in 2019 to US$12.9 billion by 2024.

"BacTech is like a poster child for what is legitimately a green cause," said Chris Temple, editor of The National Investor and a longtime BacTech investor. "It's a green company that's going to clean up toxic material around mines and be able to process troublesome ores."

The company's motto, "Our bugs eat rocks," describes the bioleaching, which uses naturally occurring bacteria, harmless to humans and the environment, to extract precious and base metals from ores, concentrates, and tailings. If the rocks are bricks in a wall, sulfur is the mortar. BacTech's bacteria eat the sulfur, causing the wall to come crashing down.

The Catalyst: Co.'s Fit in Ecuador a 'No-Brainer'

Lasso has a lot going on right now in the South American country. Facing possible impeachment and removal from office on corruption charges, he triggered a constitutional clause to dissolve the national assembly.

Dozens of permits have been awaiting his signature, but Orr said it helped that BacTech isn't a mining company.

BacTech is "more a 'green mining' and remediation story, AND (they) have such a robust bankable feasibility study, promising disproportionately large returns for the community/employees than would be typical for a project the size of Tenguel otherwise," Temple wrote on May 16. 

The construction permit for BacTech's plant was approved last March, and the company signed an Investment Protection Agreement (IPA) with the government in May, giving it a 12-year income tax holiday and international arbitration for disputes.

On March 28, 2023, technical analyst Clive Maund rated BacTech an Immediate Buy.

The plant will have a small footprint, as much of the 100 acres of land bought for it will continue to be used by local farmers. BacTech has agreed to let them keep harvesting 80% of the farm's thousands of cocoa trees.

For the feed going into the plant, there are 90 small mines in the area that produce significant amounts of arsenic with gold in the area. The plant would process about 30,900 ounces gold (Au) per year. There is potential for expansion; the total availability of materials in the area is an estimated 250 tonnes per day.

At current prices, the plant would have pre-tax earnings of about US$14 million and a two-year payback period, according to Orr.

Temple said the project should be popular with Ecuador residents and the government.

"An Ecuadorian government wanting (a) solid, long-term business that both employs its citizens (and at some of the highest wages in the country in this case) . . .  and cleans up the environment sees this as a no-brainer," Temple wrote.

Moody's Selected for Green Bond Verification

The company has also announced that it has selected Moody's to provide third-party verification of BacTech as a Green Bond issuer.

Green bonds are fixed-income instruments that raise funds to finance projects with positive environmental or climate benefits.

Toronto-based Sequestr has been brought on to help prepare the necessary documentation for the certification application.

BacTech hopes to raise US$20 million for the plant.

"BacTech meets all the criteria needed to apply for Green Bond certification, and I'm confident we are focused on the right financial instrument to develop the Tenguel project," Orr said.

The company also announced the closing of a small second tranche of its recent placement for US$20,000. The offering consists of a common share and a common share purchase warrant that allows the holder to purchase an additional common share at $0.12 for a period of two years from closing. The unit is priced at $0.08.

On March 28, 2023, technical analyst Clive Maund rated BacTech an Immediate Buy.

"On the five-year chart, we can see how the downtrend from the late 2021 peak brought the price back down to a cyclical low at strong long-term support where an intermediate base pattern has formed," he wrote.

"Moving sideways within this base pattern resulted in the price breaking out from the downtrend before breaking higher last month into what is believed to be a new bullmarket, so the reaction back of recent weeks in response to the financing is viewed as presenting an opportunity to buy it at a good price ahead of renewed advance."

Ownership and Share Structure

Nearly half of the company, 49%, is held by insiders, management, and strategic shareholders, the biggest of which is Option Three Advisory Services Ltd., which owns 8.48%, or 15.57 million shares, according to Reuters. That also includes CEO Orr, who owns 3.57% or 6.54 million shares, and Board Director Timothy Lewin, who owns 0.54% or 0.98 million shares.

The rest is retail.

The company has 183.46 million shares outstanding, including 159.12 million free floating. Its market cap is CA$13.07 million, and it trades in a 52-week range of CA$0.11 and CA$0.055.

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Important Disclosures:

1. BacTech Environmental Corp. are billboard sponsor(s) of Streetwise Reports and has paid SWR a sponsorship fee between US$3,000 and US$5,000.
   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.
2. Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
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