BacTech Environmental Corp. (BAC:CSE;BCCEF:OTCQB;OBT1:FRA) is in the process of obtaining certification as an issuer of Green Bonds to finance its bioleaching plant in Tenguel, Ecuador.
The company has enlisted Toronto-based Sequestr to help prepare the necessary documentation for the certification application. It hopes to raise US$20 million for the plant.
After a contraction last year, analysts expect the energy transition to be a priority and for green bond markets to rebound. They expect issuance of about US$600 billion, according to Markets 360.
"There's been a massive appetite in capital markets for anything that can be legitimately described as green," longtime BacTech investor Chris Temple, editor of The National Investor, told Streetwise Reports.
"There's been a massive appetite in capital markets for anything that can be legitimately described as green," longtime BacTech investor Chris Temple, editor of The National Investor, told Streetwise Reports.
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 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," BacTech Chief Executive Officer Ross Orr said.
Green bonds are fixed-income instruments that raise funds to finance projects with positive environmental or climate benefits.
Using naturally occurring bacteria, bioleaching makes it possible to work with lower-grade ore and recover metals from tailings sites as well as mines.
“Our bugs eat rocks,” the company says. Bacteria chew and oxidize the sulfides in the rock like mortar in a brick wall. Once that mortar is gone, the wall crashes down, Orr said.
The Catalyst: A Green 'Poster Child'
Sequestr, which works to empower companies to become industry ESG (environmental, social, and governance) leaders, is helping BacTech prepare the necessary documentation for the certification application.
The issuance of green certificates for green bonds is not standard practice, but some organizations have developed certification steps so investors know that a bond meets certain environmental criteria, BacTech said.
One example is the Climate Bonds Initiative, which reviews the bond, assesses its alignment with environmental standards, and provides certification if they are met.
"Obviously, (BacTech) qualifies," Temple said.
"BacTech is like a poster child for what is legitimately a green cause," Temple continued. "It's a green company that's going to clean up toxic material around mines and be able to process troublesome ores."
"BacTech is like a poster child for what is legitimately a green cause," Temple continued. "It's a green company that's going to clean up toxic material around mines and be able to process troublesome ores."
The company has received its construction permit and approval from the government for its environmental impact study on the site but is working through the community consultation phase before the government issues the final environmental permit.
At the same time, the company is working on getting the Ecuadorian government to drop a "mine" designation for the project.
"We don't mine anything," Orr said. "We fill in holes as opposed to digging them."
Pressures from government and environmental groups are forcing companies to pay more attention to — and raise more capital for — ESG initiatives.
"As the countries tighten the environmental regulations and the public concern about the mining industry grows, this increases the pressure on these mining companies to minimize their environmental impacts and pay a higher amount to the occurring local issues," Markets and Markets wrote.
One Permit Left
Bioleaching was first attempted commercially in South Africa in 1986, and there have been more than 20 plants built globally since then.
The construction permit for BacTech's plant was approved last March. 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.
However, the consultation permit has not been issued as the country continues to face political uncertainty. Its president, Guillermo Lasso, faces possible impeachment and removal from office on corruption charges.
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.
The company is also opening a pilot facility to treat low-grade nickel in pyrrhotite and recover associated elements like iron and sulfur.
The project should be popular with Ecuador residents and the government, Temple and Orr both said.
Streetwise Ownership Overview*
BacTech Environmental Corp. (BAC:CSE;BCCEF:OTCQB;OBT1:FRA)
"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.
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$12.19 million, and it trades in a 52-week range of CA$0.13 and CA$0.055.
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