Featured Company / BacTech Environmental Corp.

Mining, regardless of the target, is in need of new technologies.  Frankly, the industry is heavily regulated – and needs to be – because at its core, it can be highly pollutive and damaging to the environment.  For decades, many of the same processes have been employed to collect gold and other minerals from ore, including the use of poisons like mercury to separate the valuable metals from the rock.  While many of the larger miners can afford to use all means possible to be environmentally friendly (to the best degree possible anyway), smaller, artisanal miners aren’t afforded the luxury of such resources.

That is, until companies like BacTech (CSE:BAC) (OTCPK:BCCEF) have emerged with a new application for an existing technology for problems in mining that cause things like acid and arsenic to be released into the environment.  Toronto-based BacTech provides an alternative processing solution, called bioleaching, for artisanal miners who use mercury as a means of liberating gold and silver.

Many may think of artisanal miners as only a small piece of the global gold supply, but when put into the context that the world’s biggest gold producer, Barrick Gold (TSX:ABX)(NYSE:ABX), produces about 5.5 million ounces annually, and artisanal miners produce about 10 million ounces per year, the problem becomes a little more clear.  Furthermore, the artisanal/small mining industry is comprised of approximately 30 million people worldwide, far more than the aggregate staff of all the top miners combined.  These small miners simply lack the investment capacity for a clean technology, for which BacTech offers modern processing methods at affordable capex to replace toxic, antiquated process means.

BacTech accomplishes this by using conventional gravity/flotation to remove sulphides from tailings to make a concentrate.  Sulphides are what cause the acid release from tailings.  Tailings are the waste from the flotation process which is used to separate the metal-laden sulphides from barren uneconomic rock. In older times sulphides recovery could be as low as 80% with 20% going to the tailings. Therefore, historic tailings tend to contain more metal than newer ponds due to technological advancement.
 
To that point, BacTech demonstrates exemplary environmental performance with its technology because of its dual functionality.  It can be used as a front-line processing technology that avoids the use of mercury and stabilizes arsenic, while also being available to remediate highly toxic mine tailings and eliminate acid rock drainage.  In either case, BacTech recovers precious and base metals that can be sold to completely offset the remediate expense and still generate a profit.

“Good for miners and good for the environment” about sums it up. Or as the Company’s logo states, “Our Bugs Eat Rocks”.

Little BacTech, with its $2 million market capitalization, is one of only two companies in the world (Gold Fields (NYSE:GFI), $3.2 billion market cap, being the other) that have developed bioleach plants for their own operations for gold recovery.  BacTech has built/licensed three plants so far that have recovered up to 95% of gold-in-concentrates.

The Ontario government, who is dealing with tailing issues itself with arsenic neutralization, sees BacTech’s technology as potentially valuable solution.  To wit, the province has granted BacTech $150,000 towards the company’s test work at the Goodman School of Mines at Laurentian University in Sudbury, Canada.  BacTech sourced 150 kilograms of arsenopyrite concentrate (the term for arsenic/sulphide ore) from floatation plants in Ponce Enriques in southern Ecuador for test work using bioleaching.

The Ponce Enriques project for BacTech carries great implications as a company maker, as it is a region that relies heavily upon mining for its economy.  The problem is that the tailings are near capacity, which could lead to shutting down mining unless the tailings are addressed immediately. This would not be well received by the locals.

At a meeting with the Ministry of Mines in December, BacTech unveiled its concept for remediation. The idea would be to truck the ore down the mountain (from 1,000 to 1,500 meters) to a bioleach plant to be built on the coastal plain. After processing the tailings would be deposited and capped in a lined tailings facility.   Remember, these tailings, which sit halfway up a mountain, were processed through arcane methods that failed to recover large portions of the gold.  Grades in the tailings still run between 2 – 6 grams per tonne, a quantity that many miners strive to achieve in developing new mines.

These tailings are the source of the 150 kg of material being evaluated at Laurentian University.

This initiative is concurrent with BacTech’s revenue-sharing agreement with the Bolivian government and tailings from a mill complex at Telamayu.  In this case, BacTech plans to refurbish the existing mill. Using conventional equipment, the acid-generating sulphides will be removed, and tin, silver and copper will be produced as a result.

57 holes at the project have verified through independent assay that the contained metals in the tailings are similar to those found in the actual mineral deposit.  A NI 43-101 resource calculation was produced by an independent consultant, positioning BacTech with expectations to be producing at the project this year. With grades of 8.2 ounces of silver, 1.7% copper and 1.3% tin (tin trades for >$21,000/t) the tailings have an aggregate value of US$250M in situ.

The project is forecast to generate margins in excess of 60% and will have 5-year life processing 100,000 tonnes per year.  The expected capital requirement to refurbish the existing mill is $US7M-8M. BacTech will receive 100% of the cash flow until the debt for the project is repaid, or 18 months, whichever comes first. While the project initially is focused on the “Antiguo” tailings, BacTech also has an option on the larger “Nuevo” tailings, both situated at the Telamayu mill site near the town of Atocha in the Department of Potosi in Bolivia. Comibol, the state-owned mining group, has indicated the 4M tonnes contain lower grades of silver but include such rare earths as indium, gallium and germanium. A closer look will be needed in year 2 to determine their value.

BacTech anticipates cash flow after payback of the capital would run $US6-7M per annum for 5 years or cash flow per share that is more than double the current share price.

Given the background of the technology and the monetary and environmental benefit, it shouldn’t be surprising that Telamayu is only 1 of 26 projects that were offered to BacTech initially.

The emerging nature of BacTech is backstopped by more than 100 years of dedication to the industry by the management team, including 10 years of developing BacTech by President and CEO Ross Orr.  In addition, the company’s board contains seasoned vets in areas specific to BacTech’s focus, including a recognized leader in mining industry research (Chairman John Gingerich), a partner in a global trader of concentrates (Walter Cimowsky), the executive chairman of High River Gold since sold (Donald Whalen), and a former prosecutor for the Ontario Securities Commission (Jay Naster).

As it works to build its footprint for simultaneous tailings reprocessing, metal recovery and pollution remediation, BacTech is seeking to build its presence as a leader in “green” metal production.  The company recently penned a letter of intent with Blockmine Development, a company focused on introducing blockchain technology into the mining industry, laying out early terms for a partnership to utilize blockchain technology to verify production of metals in an environmentally-friendly manner.

Best known as the decentralized ledger that creates an immutable digital record of transactions for Bitcoin and other cryptocurrencies, blockchain’s potential applications are far from limited only to cryptocurrency.  In fact, while publicized to the point of nearly being synonymous with Bitcoin, blockchain is considered by some experts as the technology that will reshape how the world documents and shares transactions of all types, including audits in the mining industry.

The concept is akin to the process used to ensure diamonds aren’t sourced from unscrupulous supply chains, such as what have infamously become known as “blood diamonds.”  Similarly, buyers of metals need to know that they are purchasing, and reselling metals produced through acceptable mining standards and processes that don’t damage the environment, hence the term “green” metals as a reference to other “green” initiatives like recycling and sustainable energy solutions.

Given the global “green” initiative, it’s difficult to argue with Brent Rouble, President of Blockmine Development, in stating, “I foresee a huge demand for this type of mineral recovery in the future, and I can even see the markets wanting to place a premium on this type of environmentally beneficial ore.”

In aggregate, it’s hard to argue with anything that BacTech has developed and accomplished to date.  One day, this underappreciated company could very well be recognized for the pioneer that it is and when that day comes, it certainly won’t have a market value around $2 million.