Ecuadorian Court Temporarily Suspends Plant's Permit Process

The Constitutional Court of Ecuador has suspended a presidential decree unlocking the environmental consultation process for many projects in the country, including green technology company BacTech Environmental Corp.'s (BAC:CSE;BCCEF:OTCQB;OBT1:FRA) 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.

The court's decision came after a complaint filed by the indigenous group CONAIE, or the Confederation of Indigenous Nationalities of Ecuador, which last month participated in protests against a mining project involved in the same process.

But as BacTech Chief Executive Officer Ross Orr has pointed out, the company is not building a mine but cleaning up after them.

"I would like to highlight that BacTech is not a mining company actively engaged in mining," Orr said. "Our business model calls for the purchase of high arsenic/gold concentrates from miners in Ponce Enriquez. Through bioleaching, we will liberate gold and silver for recovery while producing a stable form of arsenic as a by-product. It is our intention to significantly raise the level of compensation to our workers compared to what they earn today. We will also mitigate the amount of arsenic that goes to the tailings."

Decision is Temporary

The decision is temporary. The decree covering the consultation process will be provisionally suspended until there is a final decision by the Constitutional Court. President Guillermo Lasso and other public bodies have 15 days to present their arguments.

Chris Temple, the editor of The National Investor, has written that "it's hard to conceive of any reason why the community would oppose this."

"BacTech has recently completed the information stage of the environmental consultation process in Tenguel, where the project received very positive feedback," the company said in a release.

"The project is being well received by the locals, and they look forward to getting to work," Orr wrote recently in his weekly "Sunday Morning Coffee" email to shareholders and supporters. "I estimate that process will be complete by the end of August."

Chris Temple, the editor of The National Investor, has written that "it's hard to conceive of any reason why the community would oppose this."

The Catalyst: A Massive Market Appetite for Anything Green

The company's motto is "Our bugs eat rocks." Its bioleaching process uses naturally occurring bacteria, harmless to humans and the environment, to extract precious and base metals from ores, concentrates, and tailings.

Technical Analyst Clive Maund of CliveMaund.com also rated BacTech an Immediate Buy in March.

Think of the rocks as bricks in a wall, with sulfur acting as the mortar. BacTech's bacteria eat the sulfur, causing the wall to come crashing down.

"There's been a massive appetite in capital markets for anything that can be legitimately described as green," and BacTech is "like a poster child for what is legitimately a green cause," Temple said.

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.

"It's a green company that's going to clean up toxic material around mines and be able to process troublesome ores," Temple said.

Technical Analyst Clive Maund of CliveMaund.com also rated BacTech an Immediate Buy in March.

Framework for Green Bonds Initiated

The company recently announced it had engaged an Ecuador-based securities firm to help market its proposed offering of US$20 million in Green Bonds to pay for the plant.

Quito-based Analytica Securities will play a crucial role in the offering.

"We estimate that US$16M of the US$20M raised will be allocated to the capital portion of the bioleaching facility construction," Orr said. "The remaining US$4M will be utilized to finance the purchase of concentrates from the local miners, reinforcing our commitment to supporting the local economy."

BacTech also has launched a new sustainable framework for issuing bonds. The framework will help BacTech access a "global pool of sustainable investors interested in financing environmental and social projects," Orr said.

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$14.81 million, and it trades in a 52-week range of CA$0.10 and CA$0.055.

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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.
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