Co. Closes on Silver Royalty Acquisition From Green Tech Co.
Silver Crown Royalties Inc. (SCRI:CBOE; SLCRF:OTCQX; QS0:FSE) announced that it has closed on its purchase of a silver royalty from BacTech Environmental Corp.'s (BAC:CSE; BCCEF:OTC; OBT1:FSE) future bioleaching facility in Tenguel, Ecuador. One analyst says BacTech has developed technology important to the "mining industry and the environment worldwide."
Silver Crown Royalties Inc. (SCRI:CBOE; SLCRF:OTCQX; QS0:FSE) announced that it has closed on its purchase of a silver royalty from BacTech Environmental Corp.'s (BAC:CSE; BCCEF:OTC; OBT1:FSE) future bioleaching facility in Tenguel, Ecuador.
Announced in October, the sale received CBOE approval last month.
Under the agreement, Silver Crown acquires a 10-year annual silver royalty on the Ecuador plant, equating to the cash equivalent of the greater of 90% of the silver processed at the facility or a minimum annual payment of 35,000 ounces silver.
"We are very excited to close this all-equity transaction with BacTech," Silver Crown Chief Executive Officer Peter Bures said. "The royalty has the potential to more than double our current revenues at less-than-25% dilution. We look forward to cultivating a positive relationship with BacTech as they endeavor to process environmentally sensitive mine waste in an ecologically sound manner."
The plant is expected to produce 45,000 to 50,000 ounces of silver every year, with a second-phase expansion to take annual production to more than 200,000 ounces per year. Silver Crown is paying CA$4 million in common shares in three tranches to BacTech in exchange, including an equal number (100,000) of common share purchase warrants exercisable at CA$16 for three years from closing as part of the first tranche, which has already been paid to the company. The remaining tranches will be issued at milestones in the development of the plant, including a final installment of 200,000 shares once commercial production begins.
The expected annual revenue paid to Silver Crown would be a minimum of US$1.4 million annually based on the price of silver at writing, which was US$31.39 per ounce.
"We look forward to arranging the financing for our Ecuador project to accelerate the receipt of the balance of the shares owed under the agreement, said BacTech President and Chief Executive Officer Ross Orr. "BacTech will continue to pursue additional gold and silver feeds that have arsenic issues where bioleaching can enable miners to achieve higher returns than they currently receive. As shareholders in SCRi, it is safe to assume that they would be our first call should we obtain additional material for processing."
Advantages of Deal
BacTech has said the royalty sale strengthens its balance sheet with the potential to add the Silver Crown shares, provides BacTech with upfront capital through share issuances, and has minimal revenue impact since the royalty only represents about 1.2% to 1.3% of the projected total revenues from Tenguel.
"The 10-year agreement provides a stable, long-term relationship that could lead to future collaborations on other silver-producing projects," BacTech Chief Executive Officer Ross Orr said.
"It is hard to overstate the significance of the technology BacTech (is developing) for the mining industry and the environment worldwide," wrote Technical Analyst Maund.BacTech has also noted that as a shareholder in Silver Crown, it gains exposure to upside in silver prices and Silver Crown's performance and allows it to "concentrate on its core bioleaching technology and gold recovery operations while still benefiting from silver production."
The company's bioleaching process uses naturally occurring bacteria, harmless to humans and the environment, to extract precious and base metals from ores, concentrates, and tailings. Its motto is "Our bugs eat rocks." It anticipates gold production ranging between 31,000 and 35,000 ounces per year with a second phase expected to increase throughput fourfold.
BacTech has said all of the necessary permits have been issued for the plant in Tenguel, including the Environmental Impact Study and the consultation permit. Construction time is estimated to be 12-14 months.
Ecuador's small mines, including 90 in the area of the plant that produce significant amounts of arsenic with gold, will be the feed for the plant. There is potential for expansion; the total availability of materials in the area is an estimated 250 tonnes per day.
"It is hard to overstate the significance of the technology BacTech (is developing) for the mining industry and the environment worldwide," wrote Technical Analyst Maund about BacTech in April, which is also developing what it says is the first zero-waste bioleaching process for recovering metals, fertilizer, and iron from millions of tons of mine tailings worldwide.
The Catalysts: Silver, Gold Both in the Mix
According to Christopher Lewis at FX Empire on Thursday, "The silver market continues to see a lot of pressures to the upside, as the barrier just above looks likely to see a potential move to the upside. The market is likely to see a lot of noise near the US$31.50 level, an area that the market has been resistant to breaking out above."
Streetwise Ownership Overview*
Silver Crown Royalties Inc. (SCRI:CBOE)
*Share Structureas of 8/15/2024Source: Silver Crown Royalties Inc.Streetwise Ownership Overview*
BacTech Environmental Corp. (BAC:CSE;BCCEF:OTC;OBT1:FSE)
*Share Structureas of 11/26/2024Source: BacTech Environmental Corp.Lewis said he thinks prices will go higher if they can break that level.
"This is a market that has been building a bit of a base for a while and now, I look at this through the prism of a market that has pulled back to a major round of figure to find support in the form of US$30," he said. "If we can break above the US$31.50 level, then I look for silver to go to the $33 level, followed by the US$35 level."
Experts agree gold is in a bull market, despite prices holding steady this week.
Ian Salisbury wrote for Barron's that "most of the arguments gold bulls make and have been making throughout 2024 look stronger after Trump's win."
"We are still relatively constructive on gold," said Taylor Krystkowiak, investment strategist at Themes ETFs, according to Salisbury's report. "Why does gold go up? It's geopolitical uncertainty, it's deficit spending, and it's inflation. Right now, all those stars are aligned."
Ownership and Share Structures
According to Silver Crown's investor presentation, about 21% of the company is owned by insiders and management, about 16% by institutions, about 6% by corporate investors, and the rest, 57%, is retail.
Top shareholders include CEO Bures with 9.44%, Euro Pacific Asset Management LLC with 8.37%, Hassnain Raza with 3.14%, Peter Schloo with 3.03%, and Peter Simeon with 0.49%, according to Reuters.
The company has about 2.34 million shares outstanding with a market cap of CA$16.71 million.
It trades in a 52-week range of CA$6.50 and CA$9.85.
Nearly half of BacTech, 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 3.63% or 7 million shares, and Board Director Timothy Lewin, who owns 0.54% or 0.98 million shares.
The rest is retail.
The company has 193.04 million shares outstanding. Its market cap is CA$5.79 million, and it trades in a 52-week range of CA$0.08 and CA$0.02.
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Important Disclosures:
Silver Crown Royalties Inc. and BacTech Environmental Corp. have consulting relationships with Street Smart an affiliate of Streetwise Reports. Street Smart Clients pay a monthly consulting fee between US$8,000 and US$20,000.As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Silver Crown Royalties Inc. and BacTech Environmental Corp. Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.This article does not constitute investment advice and is not a solicitation for any 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. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.For additional disclosures, please click here.