Ecuadorian Securities Firm Helping Co. Sell Green Bonds

BacTech Environmental Corp. (BAC:CSE;BCCEF:OTCQB;OBT1:FRA) on Wednesday announced it has engaged an Ecuador-based securities firm to help market its proposed offering of US$20 million in Green Bonds to pay for its bioleaching plant in Tenguel.

Quito-based Analytica Securities will play a crucial role in the offering, BacTech President and Chief Executive Officer Ross Orr said.

"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."

Analytica is known for its expertise in macroeconomic and financial consulting, corporate finance, M&A, debt structuring, stock brokerage, portfolio management, and trust business management, BacTech noted.

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.

Earlier this week, BacTech launched a new sustainable framework for issuing the bonds for the plant, which will use naturally occurring bacteria to work with high-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," 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: Massive Appetite for Anything Green

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.

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

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.

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

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

Green Bonds Set to Rebound

Global issuance of green bonds is set to rebound this year with a more certain interest rate environment and catch-up from postponed issuances last year, S&P Global Market Intelligence reported. There was a 25.6% decline in the supply of green bonds in 2022.

S&P reported that China was the top nation for issuing green bonds last year, and efforts to standardize the market should spur growth there in 2023.

However, any growth in this year's green bond market will depend on recovery in the global economy, Yoshiro Fujii, executive director at the Tokyo-based Research Institute for Environmental Finance, told S&P.

BacTech's bond 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.

The company 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.

Rock-Eating Bugs

"Our bugs eat rocks," BacTech likes to say. Bacteria chew and oxidize the sulfides in the rock like mortar in a brick wall. Once that mortar is gone, the wall crashes down.  

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.

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$0.055.

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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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