Framework Launched for Environmental Tech. Co.'s Green Bonds

BacTech Environmental Corp. (BAC:CSE;BCCEF:OTCQB;OBT1:FRA) announced it had launched a new sustainable bond framework for issuing green and social bonds to pay for its bioleaching plant in Tenguel, Ecuador.

The company hopes to raise US$20 million for the plant, which will use naturally occurring bacteria to work with lower-grade concentrates and recover metals from tailings and mines.

The framework will help BacTech access a "global pool of sustainable investors interested in financing environmental and social projects," said BacTech President and Chief Executive Officer Ross Orr.

"This framework will help kick start our near-term bioleach facility financing opportunities while showcasing the sustainable benefits and socioeconomic contributions that BacTech can make at the community level — from water conservation and helping prevent acid mine drainage to creating local opportunities for work, training, development, and the start of a new 'green metal' industry," Orr said.

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.

The Catalyst: Green Bond Markets Rebounding

The framework is aligned with the global best practices set out by the International Capital Market Association's Green Bond Principles 2021 and Social Bond Principles 2023, the company said.

BacTech also received a sustainability quality score of SQS2 (very good) as a second opinion from Moody's, its second-highest score demonstrating a significant contribution to sustainability.

"There's been a massive appetite in capital markets for anything that can be legitimately described as green," said longtime BacTech investor Chris Temple, editor of The National Investor.

"The framework demonstrates a significant contribution to sustainability," Moody's said.

Money raised will finance BacTech's bioleaching plant and support four eligible investment areas: pollution prevention and control, sustainable water and wastewater management, socioeconomic advancement and empowerment, and generation of decent and inclusive employment.

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," said longtime BacTech investor Chris Temple, editor of The National Investor.

'Poster Child' For a Green Cause

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

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

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

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.

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

Rock-Eating Bugs

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

President Guillermo Lasso recently signed a decree setting up the final permitting process for the company.

Bioleaching was first attempted commercially in South Africa in 1986, and there have been more than 20 plants built globally since then.

“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.

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.

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 185.36 million shares outstanding, including 159.12 million free floating. Its market cap is CA$16.55 million, and it trades in a 52-week range of CA$0.10 and CA$0.095.

Sign up for our FREE newsletter

Important Disclosures:

1. BacTech Environmental Corp. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000.
2. 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.
3. Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
4. The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional. 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.

For additional disclosures, please click here.