In a remarkable turn of events for BacTech Environmental Corp. (BAC:CSE; BCCEF:OTC; OBT1:FSE), the company has secured CBOE approval to execute a significant royalty sale, previously heralded last month, with none other than Silver Crown Royalties Inc. (SCRI:CBOE; SLCRF:OTCQX; QS0:FSE). This strategic agreement positions Silver Crown to benefit from a decade-long annual silver royalty, stemming from BacTech’s ambitious bioleaching facility envisioned in Tenguel, Ecuador.
According to the intricacies of the deal, Silver Crown will reap the cash equivalent derived from the greater of 90% of the silver processed at the site or a baseline of 35,000 ounces of silver each year. BacTech lauded this collaboration, asserting that it unlocks latent value within its silver byproduct, allowing the company to maintain its unwavering focus on environmental technologies and gold extraction, potentially enhancing both its financial health and project development prospects.
The Tenguel facility is poised to yield an annual silver output of between 45,000 to 50,000 ounces, with plans for a second-phase expansion designed to propel annual production beyond the 200,000-ounce mark. In this exchange, Silver Crown commits CA$4 million in common shares, disbursed in three tranches, alongside 100,000 common share purchase warrants priced at CA$16, valid for three years following closure. Fulfillment of the remaining tranches is tied to the progressive milestones of the Tenguel plant, including a final allocation of 200,000 shares once commercial production takes flight.
BacTech anticipates that this revenue stream could guarantee Silver Crown a minimum of US$1.07 million per annum, calculated against the current silver price of US$30.45 an ounce, as referenced at the time of writing.
Strengthening the Balance Sheet
BacTech emphasizes that this royalty transaction will bolster its financial positioning in multiple dimensions. The infusion of CA$4 million worth of Silver Crown shares notably strengthens its balance sheet, while upfront capital from share issuances offers additional liquidity. Importantly, the revenue implications of the royalty are marginal, attributable to its representation of a mere 1.2% to 1.3% of the forecasted total revenues from the Tenguel operation.
“The ten-year agreement provides a stable, long-term relationship that opens doors for future partnerships on additional silver-producing endeavors,” remarked BacTech’s CEO, Ross Orr. He further elucidated that the phased release of shares aligns seamlessly with BacTech’s project development milestones, furnishing essential financial backing at pivotal junctures.
Additionally, BacTech flags the benefit of becoming a Silver Crown stakeholder, inviting potential upside linked to surging silver prices and the performance trajectory of Silver Crown itself. This strategic shift allows BacTech to hone in on its core competencies, namely bioleaching technology and gold recovery, while still capturing the advantages offered by silver production.
First in a Series of Successes
BacTech’s innovative bioleaching process harnesses naturally occurring bacteria, which are entirely benign to both humans and the environment, to extract a plethora of precious and base metals from ores, concentrates, and tailings— encapsulated in their mantra: “Our bugs eat rocks.”
“The conundrum of shifting governments pales in comparison to the enduring challenge of environmental concerns that demand resolution,” Orr has declared. “I am convinced that the Ecuadorian initiative is but the first domino in a cascade of triumphs that will emerge as our technology proves its mettle.”
With an expected annual gold yield ranging between 31,000 to 35,000 ounces, a forthcoming phase is set to quadruple production capacity, drastically amplifying both gold and silver outputs.
BacTech has successfully navigated the permitting process for the Tenguel facility, acquiring all necessary approvals, including the Environmental Impact Study and local consultation permissions. Construction is anticipated to span 12 to 14 months.
Ecuador’s smaller mining operations—numbering 90 in the plant’s vicinity, notorious for generating arsenic-laden gold—will serve as a vital feedstock. Moreover, the potential for expansion is tangible, given an estimated material availability of 250 tonnes per day in the area.
BacTech has also filed an expanded patent application for what they tout as the pioneering zero-waste bioleaching methodology, targeting the recovery of metals, fertilizer, and iron from millions of tons of mine tailings scattered across the globe.
“The magnitude of BacTech’s technological advancement is hard to exaggerate, given its profound implications for the mining sector and the environment at large,” offered Technical Analyst Maund. “There exists an immense reservoir of tailings—potentially numbering in the hundreds of millions of tons—waiting to be transformed.”
Silver Is Also an Industrial Metal
Meanwhile, the silver market is characteristically volatile, manifesting significant fluctuations this Monday, with traders gauging whether it can stabilize above the pivotal US$30 mark. Christopher Lewis from FX Empire articulated the market’s tentative foray into a rally, observing an initial surge during the morning hours that swiftly retracted—signifying a period of indecision.
Lewis explained, “The current pullback is hardly unexpected, encapsulating the ongoing oscillation we witness, and I envision the US$30 threshold as a crucial support line. This notably substantial figure draws collective attention within the options market. Conversely, a breakout beyond the 50-day EMA could signal an escalation towards the US$33 range.”
Notably, silver’s dual status as both a precious and industrial metal underpins its significance in modern applications. Renowned as the most conductive element, silver is indispensable in coating electrical contacts across an array of devices, including computers, phones, automobiles, and household appliances, while also playing a pivotal role in solar technology.
“I anticipate that the market’s behavior will be heavily influenced by overarching fiscal anxieties gripping governments globally, alongside the persistent geopolitical tumult, albeit these elements are less pronounced in the silver domain,” noted Lewis. “Presently, this market exhibits characteristics reminiscent of a ‘buy-the-dips’ scenario.”
Mordor Intelligence forecasts a robust compound annual growth rate (CAGR) exceeding 5% for silver from 2024 to 2029, projecting continued positive momentum in the sector.
Newsletter editor Brien Lundin urges investors to maintain an optimistic outlook despite transient price declines, highlighting that such fluctuations are merely temporary setbacks.
Ron Struthers, of Struthers Resource Stock Report, echoed similar sentiments, predicting a substantial surge in silver’s value. “Earlier this year, I identified a breakout from a cup and handle formation, heralding the potential for a significant uptrend, and recent movements have confirmed that trajectory,” he asserted on October 23.
Ownership and Share Structure
In terms of corporate ownership, insiders—including management and strategic stakeholders—control nearly half of BacTech, with a notable 49% ownership. Option Three Advisory Services Ltd. emerges as the largest shareholder, holding 8.48% (15.57 million shares), followed by CEO Orr with 3.57% (6.54 million shares) and Board Director Timothy Lewin at 0.54% (0.98 million shares). The remainder is distributed among retail investors.
BacTech boasts 193.04 million shares outstanding, with a market capitalization of CA$5.8 million, trading within a 52-week range of CA$0.09 to CA$0.02.
